Managing Your Cash Flow

Late payment culture: SMEs are still at the mercy of big customers
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Why cash flow management is essential for good performing businesses

3 Mins

Effective cash flow management is essential to the successful running of all businesses, but especially for SMEs with Hitachi Capital’s Late Payments report revealing that more than a third of UK SMEs have been forced to use their own money after experiencing cash flow problems.

SMEs and cash flow

With their tighter margins, SMEs are more likely to fail if they are experiencing cash flow issues– meaning good financial management should be “business as usual” for smaller businesses, and not some afterthought. There are many additional benefits to good cash flow management, apart from survival.

In fact, a business with well-managed finances looks commercially successful, making it more attractive to stakeholders.

However, finding practical solutions to cash flow issues doesn’t have to be difficult. One of the most effective solutions available is invoice finance which can ensure your business maintains steady cash flow with minimal effort on your part.

Invoice finance steadies cash flow problems

Invoice finance is a simple process where a business invoices its customer for the products or services provided. A copy of the invoice is sent to the business’s invoice finance provider who collects the debt owed on their behalf. The provider then pays the business a majority of the invoice payment and the remaining amount is released once the customer has paid the invoice in full.

Cash flow management with minimal effort

Invoice finance enables businesses to focus on making their business a success by letting their provider do the work chasing payments. By receiving the payment within hours of the invoice being raised, businesses reduce their cash deficient while avoiding the stress of chasing late payments, allowing owners to get on with the important task of growing their business.

Using an invoice finance provider can improve a business’s cash flow far more effectively than using other methods.

While bank overdraft facilities are seen as a traditional choice for businesses, they can be more expensive and can withdraw finance facilities at short notice, leaving a business with worse cash flow issues than before. Another benefit of using invoice finance is that it can automatically expand with a business’s sales turnover.

Hitachi Capital Invoice Finance has created a new cashflow finance solution providing simple, affordable finance to SME’s. Find out more here.

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