SMEs are the lifeblood of the economy. At present, Britain’s small businesses account for:
99.9% of all UK companies
48.8% of the country’s total turnover, and;
Almost half of the UK workforce (14.1m people)
However, one of the greatest challenges faced by small businesses is retaining a healthy level of working capital. Contrary to popular belief, many businesses with cash flow worries have no shortage of business. Often, their predicament is down to either limited resource to fulfil demand (a phenomenon known as overtrading), or as a direct result of late payment.
Invoice Financing gives you the cash you're owed, faster…
Invoice financing unlocks the capital tied up in unpaid invoices by lending businesses money against commercial debtors, giving quick and easy access to the funds they need to keep cash flow steady. There are generally two routes for invoice finance:
Factoring: when you raise an invoice, the lender buys the debt, taking over the management of your sales ledger, and collecting debts on your behalf.
Discounting: you're lent an agreed percentage of funds against your current unpaid invoices, as debtors pay, the money goes against the amount borrowed, enabling you to borrow more.
Currently, 83% of invoice finance users are small businesses and last year, a total of £16bn was made in advances to businesses; a figure that is expected to grow.
Any business considering invoice financing should take care to choose a reliable lender offering competitive rates. As with any funding, when implemented correctly it can enable businesses to take control over their finances and build a successful operation.