Research by Wyelands Bank has shown financial service providers use too much jargon for relatively simple business finance terms.
The study of 37 providers showed the use nearly 30 different terms for just three financial products.
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Receivables finance, where funding is secured against invoices, has the highest number of synonyms used with some 21 different names.
Meanwhile trade finance, which enables the purchase of goods for confirmed orders from credit worthy buyers, has five different names. Inventory finance, where credit is secured against stock, may be considered the least confusing product as it is given just one other name.
Iain Hunter, chief executive officer of Wyelands Bank, said: “These relatively simple concepts do not need so much jargon around them. Jargon does not differentiate through innovation, but through confusion.
“It makes it harder for customers to understand what they are looking for or to make the right decisions about what solution to choose. We believe the industry should apply the same definitions around each of the core products, doing more to help customers understand.”
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By GlobalDataThe research also acknowledged that many of the business finance terms used are slight variations of a core product or labelled to appeal to a particular sector.
Hunter continued: “Few customers have the time or expertise to pour over the subtle distinctions between seemingly similar services. Rarely are they experts in the finance industry and nor should they have to be.
“Making it easy for firms to raise funds to trade, grow and create jobs 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.
“This is why we believe financial services companies should be straightforward and easy to deal with. This is particularly prevalent when talking about the products and services on offer. All in our industry should share this responsibility.”
The research looked at providers of working capital solutions as listed as members of the Asset Based Finance Association (ABFA). The products names were taken from the company websites.
Wyelands Bank was established in in 2016, when it was acquired by industrialist Sanjeev Gupta. In April this year Gupta acquired Nigerian Diamond Bank’s UK-regulated banking subsidiary, Diamond Bank (UK).
