Future Retirement Success
  • Politics
  • Business
  • Investing
  • Stocks
  • Politics
  • Business
  • Investing
  • Stocks

Future Retirement Success

Business

The unsung hero for SMEs: Why invoice finance is crucial in tough economic times

by May 25, 2023
May 25, 2023
The unsung hero for SMEs: Why invoice finance is crucial in tough economic times

There is something rather troubling at the moment regarding the future funding of UK (SMEs.

Certain media commentators will have you believe that ‘traditional’ lenders are in full retreat, neither having the appetite nor the resources to take a risk. It paints a picture of businesses wanting to grow, but being starved of cash to do so.

Cashflow funding doesn’t start and end with an overdraft, loan or credit card.

With cash being crucial to business survival and growth, Ant Persse, Managing Director, Optimum Finance, explains that SMEs need to ensure robust credit management activity to protect themselves from bad debt caused by business failure. They also need to access cash though funding to continue to enable them to adapt, innovate and grow. There is, however, a solution that could deliver to these requirements and could be considered an unsung hero during these tough times – invoice finance.

What is Invoice Finance

Invoice finance is a financing solution that allows businesses to receive immediate payment for their outstanding invoices, rather than waiting for their customers to pay on their own terms. In short it unlocks cash that could otherwise be trapped in your unpaid invoices. Invoice finance is a financial solution that can support the entire credit management process, protect against the risk of non-payment, and deliver funding when many other funding types are unable to.

It’s not new; indeed, it has been around for decades and supported many thousands of businesses and still does. And yet it continues to be overlooked by SMEs when seeking funding, and by the intermediaries to whom they turn for advice. Why? Because it has an image problem. More than this, it has an awareness problem.

According to the FSB Insurance and Finance Survey 2022, only 5% of businesses that applied for funding applied for invoice finance, far less than other funding types that can support working capital needs such as overdrafts (37%) and credit cards (19%). Yet the approval rate for invoice finance was one of the highest at 90%. This suggests that there is an awareness issue that needs to be addressed. Invoice finance can be the fundamental difference between make or break for many small companies and, in turn, our economy.

Liquidity and inflation challenges

Access to liquidity is more critical than ever as traditional financing providers are increasingly rejecting applications for cash. This is in part driven by the increased number of insolvencies and therefore perceived credit risk. SMEs are the backbone of the UK economy, however, and reducing the funding available to these businesses during tough economic periods only hurts it further. The demand for liquidity needs to be expanded during these periods, therefore, and not reduced.

Inflation similarly continues to be the top challenge facing small businesses this year, with many facing forced closures due to a loss of equilibrium on their balance sheets. Once the rising cost of electricity and gas are factored in, many SMEs’ margins will all but disappear. If they haven’t already, SMEs need to start preparing now for how they will finance these major increases in costs.

So why should they consider Invoice Finance? Invoice finance provides a variety of benefits for SMEs, including fast funding turnaround, and the ability to release cash tied up in unpaid invoices. Smaller independent funders like Optimum SME Finance also have more flexibility than traditional providers and can take advantage of value-creating opportunities. By changing the way SMEs are financed, they can survive and thrive in a post-pandemic, post-energy crisis, and inflationary Britain.

Conclusion

Providing the right SMEs with the pathway to secure lending will play an integral part in the economy’s resurgence – something which is in all of our interests, consumers, and businesses alike. Therefore, we need to drive awareness of products like invoice finance and those providers that offer them.

Invoice finance can be the fundamental difference between building a successful small business economy, or letting it wither on the vine. By embracing alternative financing options such as invoice finance, SMEs can not only survive but also thrive despite the challenges of a post-COVID world.

Read more:
The unsung hero for SMEs: Why invoice finance is crucial in tough economic times

0
FacebookTwitterGoogle +Pinterest
previous post
Young enterprise achieves 60th anniversary milestone – after helping 7.2M young people
next post
Biden to nominate Air Force Gen. CQ Brown Jr as Joint Chiefs of Staff chair to replace Army Gen. Mark Milley

You may also like

These 7 Bets Have the Highest RTP

November 8, 2023

Best Areas in London to Live​​

September 9, 2022

Entrepreneurs petition chancellor to maintain business tax relief

October 24, 2024

Revolutionizing E-commerce: The Crucial Role of Order Management...

December 13, 2023

London Mayor Confirms Off-Peak Fridays Trial to Commence...

March 1, 2024

Bitcoin to lose a quarter of its value...

November 11, 2022

British Airways to cancel further flights up to...

August 23, 2022

JD Wetherspoon to sell 39 more pubs as...

November 10, 2022

Labour’s Tax Policy on Private Schools to Drive...

June 10, 2024

UK car production declines for eighth consecutive month...

November 28, 2024

    Get free access to all of the retirement secrets and income strategies from our experts! or Join The Exclusive Subscription Today And Get the Premium Articles Acess for Free

    By opting in you agree to receive emails from us and our affiliates. Your information is secure and your privacy is protected.

    Recent Posts

    • Top university degrees lose sway as tech employers prioritise job-ready skills

      June 29, 2025
    • Government urges supermarkets to make healthy food more appealing in bid to tackle obesity crisis

      June 29, 2025
    • Senate Republicans ram Trump’s ‘big, beautiful bill’ through key test vote

      June 29, 2025
    • Chief Justice Roberts sounds alarm on dangerous rhetoric aimed at judges from politicians

      June 29, 2025
    • Britain’s fastest-growing firms revealed for 2025: Dfyne, Nala’s Baby and Hawkstone lead the charge

      June 29, 2025
    • Schumer to force Senate reading of Trump’s entire ‘big, beautiful bill’

      June 28, 2025

    Categories

    • Business (8,332)
    • Investing (2,081)
    • Politics (15,853)
    • Stocks (3,177)
    • About us
    • Privacy Policy
    • Terms & Conditions

    Disclaimer: futureretirementsuccess.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

    Copyright © 2025 futureretirementsuccess.com | All Rights Reserved