There has been a lot of publicity recently on the availability of finance for small to medium sized enterprises (SMEs), particularly focusing on traditional bank loans or equity investments.
However, there are other forms of business funding which should also be considered as an alternative source of money for firms.
Invoice finance is a solution that is being increasingly used by companies to deal with late payments whilst also improving cashflow. This is where a finance provider pays an agreed proportion (usually 80-85 per cent) of approved invoices to the company on receipt of a copy of the invoice. The balance (minus a small charge) is paid upon client payment.
Andrew Brown, Associate Director said: “With the economy growing, there has been a surge in demand for working capital in the SME sector that has created lots of opportunities for more invoice financing. Despite this, its current use is relatively low compared to ‘traditional’ sources of lending. In fact, only around 43,000 SMEs out of a total of nearly five million in the UK are currently using invoice finance.
“Whilst invoice financing is available from the banks and independent providers, one of the major problems is that there is a general lack of awareness by SMEs of the advantages of utilising this source of funding.”
For more information on what finance options are available for your business, please contact us today.