Financial jargon a ‘brake on manufacturing growth’
10 Sep 2019
Small to medium sized manufacturing enterprises are missing out on access to better finance because they are put off by jargon, claims a survey report by Wyelands Bank.
In a study released this week it said that more than two thirds (71%) of respondents said there was too much confusing and inconsistent terminology in the finance sector.
“Half (51%) of those asked say this jargon has stopped them from getting the financial services they need. More than half (55%) say confusing financial terminology has probably led to missed opportunities for their firm,” said the report.
The research, of mid-sized manufacturers with turnover £10 million to £300 million, also revealed that nearly three quarters (73%) considered that different banks used the same terminology for different products and services.
A similar proportion (71%) asserted that banks used different terms for identical products.
Iain Hunter, CEO of Wyelands Bank, said: “Business finance does not need so much jargon. Jargon is confusing. It makes it harder for customers to understand what they are looking for or to make the right decisions about what finance they need.
“Making it easy for firms to raise funds to unlock growth goes to the heart of the productivity debate in the UK. Anything that gets in the way can be detrimental to those firms and to the UK economy.”
On average, each firm said that the difficulties raising finance meant they had missed out on the equivalent of £20 million in revenues and 11 new contracts. These would have enabled respondents to create an average of ten new jobs, it was asserted.
Hunter added: “UK mid-sized manufacturers are struggling to access the finance they need to grow because they are confused by the jargon in the industry.
“Mid-market firms can have a disproportionate effect on growth and job creation, but they first need to be understood as individual businesses.”
According to the accountancy and business advice group BDO, said Wyelands, mid-sized businesses are critical for creating jobs. Its research suggests that, in the last year, mid-market firms created 534,900 new jobs compared with 191,000 by small businesses and a loss of 157,000 by FTSE350 firms.