How accountants can use mutual credit to support small businesses during the post-covid slump

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Posted Jun 14 2020 by Dave Darby of
How accountants can use mutual credit to support small businesses

Are you an accountant? Do you have an accountant? Do you know an accountant? If you could bring this article to their attention, we think they might find it interesting – it’s an idea that can be very useful for accountants, to help keep their small business clients afloat during the post-covid economic slump.

We’ve been talking with accountants, and they’ve been telling us that many of their clients are going to be in serious trouble over the coming months, due to loss of business caused by the lockdown. Government help has kept many of them going, but that help is going to end, and when it does, one accountant told us that up to a third of his clients’ businesses may go under.

Something else he told us was that he’s always tried to broker trades between his clients. He regularly introduces clients to each other if he thinks that they could benefit from trading together. Furthermore, he said that this is a common practice amongst accountants. Why wouldn’t it be? It provides more business for their clients, and ultimately, more business for themselves.

But what’s currently happening to the economy means that even if introduced to each other by friendly accountants, many of those businesses won’t be able to trade with each other, for one simple reason – there will be very little money around to trade with.

Now, think about that. Those businesses will have the same premises, the same equipment, the same staff and the same skills. And so will their customers, and so will their suppliers. But they’ll be completely stuck, and unable to trade because of a lack of exchange medium. Surely, for a species that can put people on the moon, it should be possible to realise that letting a lack of made-up money tokens stop real needs being met by real people who want to work is ludicrous – and find a workaround? Otherwise, we’ll have the nightmare scenario of small businesses trying to solve their cashflow problems by maxing out on their credit cards, which is expensive and unnecessary.

Alan Watts put it another way. He said that trade being prevented by a lack of exchange medium is like construction of homes being prevented by a lack of inches. Inches are just a handy way to describe the dimensions of things used to construct a house, not an intrinsic part of the house itself. And money is just the the medium that businesses use to exchange goods and services – not an intrinsic part of the goods or services provided. If you can’t use inches, use centimetres!

We at are involved with a network of people all over the country – coders, finance specialists, people in business networks, social enterprise networks, local authorities – and of course, accountants. We’re working to provide a solution to the cashflow issues that are almost definitely going to cause huge problems for small business. They already are, in fact – but things will get much worse.

We think that the solution is mutual credit. It’s a moneyless trading system that works like this. Businesses go into a directory, and get an account, set at zero. If they sell to another business in the network, they get credit in their account. If they buy from another business in the network, their account goes into debit. There’s a limit to how far businesses can go into credit or debit, and that’s it. But it’s just numbers in accounts – no money is required. The businesses involved can be thought of as pooling the standard ‘30 days to pay’ trade credit they often offer into a shared accounts book, resulting in increased liquidity and reduced risk.

The idea is that we set up accountants (or local authorities, or social enterprise networks, or business networks) with a ‘mutual credit club’ – including a website, directory, trading software, membership agreement etc., all ‘out-of-the-box’. We can host it for them too, to make it as hassle-free as possible. Their members will be able to trade with each other using cash, mutual credit or a mix of both. Members can chat with each other, and post information about sales, discounts, special offers etc.

The clubs will be mutuals – co-operatives of their members, who will make all the decisions about fees, rules, credit limits etc.

And here’s the really interesting part – these clubs will be able to trade with each other, seamlessly. Local networks are unlikely to provide everything a business needs, but they’ll be able to buy from further afield if what they need isn’t produced locally. It also means that small businesses can reach new markets and expand their customer base – including overseas.

We’re now looking to bring together small groups of accountants to help us co-design the package – to work out what would be most useful for accountants and their clients. Please help us spread the word, and bring this to the attention of any accountants that you might know. And if you’re an accountant, please feel free to contact us for more information.

Dave DarbyAbout the author

Dave Darby lived at Redfield community from 1996 to 2009. Working on development projects in Romania, he realised they saw Western countries as role models, so decided to try to bring about change in the UK instead. He founded in 2001, spent 3 years on the board of the Ecological Land Co-op and was a founder of and the Open Credit Network.