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Enterprises still facing barriers in financing – signs of an improvement also on the horizon

Medium-sized and large enterprises have increasingly acquired new financing during the past twelve months. At the same time, according to the survey, the proportion of enterprises failing in, or giving up, their intentions to raise financing appears to have increased. This is made apparent in the report on the Business Finance Survey 2013.

About every fifth small and medium-sized enterprise and about every tenth large business reported having experienced some types of problems related to the acquisition of finance. Those enterprises whose profitability or turnover had weakened in the preceding 12-month period encountered, in relative terms, the greatest difficulties in accessing finance.

Enterprises' assessments of the availability of financing over the next 12 months are quite favourable: nearly 80% of the enterprises surveyed estimate that their chances of obtaining financing will either remain unchanged or improve. The intentions are to acquire relatively more financing for machinery, equipment and intangible investments and less for working capital needs, among other things.

The results of the survey point to diversification in corporate financing structures. More large businesses than before raised financing by issuance of commercial paper and bonds. Micro enterprises, for their part, relied more widely on private equity financing. Financing options made available by finance companies also increased their relative popularity.

Margins particularly for large and medium-sized enterprises widened

According to the survey, the tightening of financing terms and conditions has continued over the past twelve months. Over half of the medium-sized and large enterprises that had acquired new credit witnessed a widening of loan margins. Contractual terms, ie financing covenants, in turn, tightened for smaller enterprises. Additional credit-related costs increased for every third enterprise that had obtained new credit.

Valuation of collateral assets and collateral requirements have remained unchanged for the bulk of enterprises. However, prices for commercial guarantees, in particular, have risen.

Average time of payment of bills to enterprises ranges from three to four weeks

Nearly every other small and medium-sized enterprise reports a lengthening of average times of payment of bills by their business clients. The average time of payment of bills by their clients is 18–27 days. The prolongation of time taken to pay bills has increased financing needs in the case of every other small and medium-sized enterprise.

Introduction of electronic billing continued at a brisk pace

The proportion of enterprises using electronic billing is growing rapidly. About 90% of large businesses already use electronic billing. The bulk of small and medium-sized enterprises have also introduced electronic bills.

The Business Finance Survey 2013 is a comprehensive overall review of the corporate sector's financing situation. The survey was carried out in September–October 2013, drawing responses from 3,661 enterprises. Organisations participating in administering the survey were the Confederation of Finnish Industries EK, the Federation of Finnish Financial Services, Finnvera plc (a State owned specialised financing company and the official Export Credit Agency of Finland), the Federation of Finnish Enterprises, the Bank of Finland and the Ministry of Employment and the Economy, and it was conducted by IROResearch Oy.

The report on the Business Finance Survey 2013 (in Finnish only) is posted as a flash version (recommended) on the Bank of Finland website:

http://www.suomenpankki.fi/fi/julkaisut/selvitykset_ja_raportit/rahoituskyselyt/Pages/default.aspx

In addition to nation-wide survey results provided in the report, results with respect to the regional centres for economic development, transport and the environment (ELY centres) will also be published in the Toimiala Online database maintained by the Ministry of Employment and the Economy.

Further information

Jukka Vauhkonen, Economist, Bank of Finland, [email protected], tel. +358 10 831 2111.
Tommi Toivola, Senior Advisor, Confederation of Finnish Industries EK, [email protected], tel. +358 9 4202 3292