The number of small and medium-sized businesses using premium financing to pay their insurance premiums has increased over the last five years, according to a survey by commercial premium finance company Aascent.
According to the new survey, 63% of UK brokers believe that more SMEs are using premium finance than in 2001.
Around a third of brokers (30%) now believe that the use of premium finance has risen to between 41%-60% of their SME books of business.
Brokers also identified the cost of credit provided by premium finance companies as the single largest deterrent to SMEs to use the facility (56%), with fees for things such as late payments and bounced cheques as the second (12%).
Aascent's sales and operations director Ed Ferrell said: “The fact that an increasing number of businesses is using premium financing suggests to me that more SMEs are taking the sophisticated view that premium finance isn't just for those who might have problems paying their premium in a lump sum; it's about intelligent financial management.
"Using premium finance not only helps cash flow, which can be very tight in an SME, it also turns what was an expense into working capital.
“On the downside, the fact that rates and fees are deterring some SMEs from using the facility is disappointing. This confirms our decision to drop all fees for our clients last year and should help alleviate brokers' concerns about fees being a problem for their clients.”
