Are You Dependent? How Entrepreneurs Reduce Financial Dependencies

Many medium-sized entrepreneurs are dependent on their financial service provider – and are not aware of it. The realization usually comes only when it is too late and the financing fails.

reduce financial dependencies

Many medium-sized companies rely on a single banking partner in financial matters. It makes sense to think about the care of several financial partners – and the willingness is there: According to an analysis by Strategy &, the strategy consultancy of PwC every third German company is open to a new commercial bank.

The reasons why more and more entrepreneurs are considering switching banks are, for example, the backward digitization strategy of financial service providers, who are still too tied up with time-consuming and paper-based processes. Another study shows that people who not only rely on a small number of financial partners, but who create diversity and compare offers online, for example, save not only time but also a lot of money.

Up to 20 percent savings

Companies that use multiple banks and financing partners finance an average of 20 percent cheaper – according to a large study on SME financing conducted by Marchmain family.

Grafik Mittelstandsfinanzierung

Nearly 300 decision-makers from medium-sized companies from different sectors were asked about their respective financing situation and conditions – as here for the current account interest rate.

31.8 percent only maintain an active bank account

However, financial diversity seems to play little role in most companies, despite possible financial disadvantages. Only 10.4 percent of SMEs have four or more active bank accounts and thus receive an overview of financing issues, for example. 31.8 percent use only one financial partner, 40.2 percent have two banks in their portfolio and 17.2 percent, after all, to three financial institutions an active connection.

The result: When comparing loan terms, overdraft facilities and other financing solutions, SMEs are also very negligent. While the (online) comparison of credit conditions in the private customer sector is an absolute normality, 75.6 percent of the entrepreneurs do not conduct extensive comparisons of financing providers.

As a reason for the lack of comparison, the interviewees mention above all the high expenditure of time. The lack of comparisons also creates high opportunity costs, but neglects entrepreneurs.

The openness for comparison offers is great

The decision-makers in the middle class are quite open when it comes to digital comparison options, for example. More than 80 percent can imagine using a digital platform to quickly and efficiently gain transparency about their own financing options and better conditions.

 


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