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Does the UK Losing its AAA Credit Rating Make Any Difference to SMEs?

A couple of weeks ago the credit rating company, Moody’s, decided to downgrade the UK’s credit rating from AAA to AA1 resulting in much discussion about the effect of that decision on the economy. While it will, undoubtedly, have a bearing on how the government handles the economy, will it make any real difference to SMEs?

Reasons given for the change

A key reason for the downgrade is that they anticipate “sluggish growth” in the UK’s economy, which, they say, will continue “into the second half of the decade”.

That means that they think our economic problems will take longer to resolve than originally thought, which may not come as a great surprise…

However, at the same time they add that the UK’s creditworthiness “remains extremely high” which is encouraging.

They, also, refer to the grading as “stable” which means they do not currently anticipate any need for a further downgrade.

Effects for SMEs

The downgrade can already be seen to have had a weakening effect on the value of sterling.

This will clearly affect any businesses involved in importing or exporting – which one way or another is all of us.

o Purchases from abroad will be more expensive and, perhaps, require additional funding.

o Overseas sales will be less expensive and, hence, potentially more attractive to buyers.

Although there is expected to be a trend toward a lower value of the pound, this change does not happen smoothly – there are always ups and downs which need to be navigated.

Action needed

As business owners, we need to be aware of both opportunities and challenges – and need to take steps to minimise any risks and take any opportunities.

When conducting business in foreign currencies, businesses should, obviously, take appropriate advice regarding currency risk.

However, it is vital that your company’s overall finance arrangements keep pace with your plans, your customers and especially the wider economy.

A working capital solution can provide this needed flexibility to ensure that opportunities can be taken or increased costs of imported stock can be met.

An Invoice Finance agreement would:

Why not call us for a no-charge, no-obligation chat about the options that are available and how these can help your business progress?


Ian Jones (Head of Business Development) on 0161 438 8555 or 07801 858737, or

Stephen Devonport (Business Development Manager) on 0161 438 8555


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Areas of the UK covered include, Manchester, London, Liverpool, Leeds, Birmingham, Sheffield, Stoke, Bristol, Southampton, Preston, Hull, Bradford, York, Bolton, Stockport, Newcastle, Sunderland, Bath, Norwich, Reading, Telford, Ipswich, Southend, Chester, Brighton, Salford, Leicester

Copyright 2012