Law firms and accountancy practices have seen a number of sector-specific challenges in the last few years, on top of the pressures of the recession. Our research suggests however that bank writeoffs on loans to professional services firms are now at their lowest level since the credit crunch.
Our figures show that UK banks wrote off £227 million of lending to law firms, accountancy practices and other professional services firms last year, down from £252 million the year before, and the lowest level since 2008. This reflects a burgeoning recovery in the professional services sector, long seen as an area in which the UK is a genuine world leader.
The figures suggest that the steps firms have been taking to secure their financial positions and shore up profitability are paying off. Their reputation for creditworthiness was knocked by a couple of high-profile failures, but the reality is that these sectors now have a far better financial strength than many other types of businesses.
As professional services firms have increasingly been thinking outside the box in terms of running their businesses more efficiently and sustainably, many more have begun to consider how alternative forms of finance can help meet their business needs.
Many professional services businesses increasingly prefer to use alternative finance solutions to help manage cashflow, spread the cost of major tax bills and to cover other investment expenditure, in place of bank loans and overdrafts.