With SMEs being more sensitive to cash flow issues, invoice financing can be an effective way for small businesses to keep things steady.
Getting funding can be a challenge and alternative finance may seem like a godsend to many new businesses – but there are funding pitfalls, and if you don’t get it right, it can be an expensive mistake.
Most businesses will come up against short-term cash flow problems at one point or another, but the key is not to let them be a long-term issue that holds you back from scaling up.
While the late payments issue continues with just 51 per cent of invoices paid on time, a breakdown of areas shows that Manchester is the least affected.
All businesses have costs, and sometimes getting a scale-up off the ground requires a cash injection. Not everyone is lucky enough to have the bank manager on their side though – so where else can you turn?
Amidst the array of challenges that SMEs in the UK face, such as securing investment, outpacing competitors and growing a customer base, the biggest obstacle to growth for 54 per cent of UK SMEs is a shortage of cash.
As many businesses start 2016 with a clean slate and new business hopes and aspirations, it is set to be another year of growth for the alternative finance market.
SMEs could soon access more invoice finance products, helping to alleviate Britain's £26bn late-payment problem.
UK banks are charging businesses in need of short-term finance £425m a year in “hidden” extra fees, according to a new report.
As small businesses look for new ways to raise money from investment other than through bank loans, invoice financing has been growing rapidly. Advocates include Lord Digby Jones, former president of the CBI and a trade minister under the last government.
With many banks still unwilling to lend, and finance in short supply for small and medium-sized enterprises, a growing number of smaller companies are looking to other sources of finance.
We spoke to Mike Cherry, the Federation of Small Business’ national policy chairman, about invoice factoring and discounting and what SMEs needs to keep in mind if they’re considering these funding methods.