Increasing number of SME's using Invoice Finance

It's been reported that the number of SME's using invoice finance to increase working capital has risen dramatically in the second quarter of 2010.

It was also reported in the same article that banks have to reserve capital against overdraft facilities even when not fully utilised.

This second point probably explains why many SME's are being pushed into their banks invoice financing facilities (as revealed by our customers) by various means. Once there, what awaits the newly hooked SME is a raft of charges that either didn't exist or are much higher than before the "credit crisis". Once all charges are taken into account there are much cheaper factoring lenders than high street banks out there!

If your business is being pressured into any kind of factoring deal then please feel free to contact us for a no obligation & confidential discussion about alternative commercial lenders.

Commercial Loans - Update Part 2

Further to our previous blog, within the UK business finance market, commercial loan options that do not appear to have been affected by changing criteria are as follows:-

International trade finance seems to have been unaffected by either price increases or loan criteria changes. Therefore exporter and importers requiring "Letters of Credit" or "Forfaiting" can still have similar expectations of funding to the previous 12 months.

The other main business finance area that is relatively unscathed is cashflow finance, although we suspect there may have been some undisclosed changes to criteria in terms of debtor book quality.

It's now possible to factor your UK government invoices

Small UK companies trading with the public sector have historically had cash flow management problems due to the inability to assign government receivables debt. This created a barrier for SME's trying to enter this market place. Although factoring or invoice discounting of trade debts was not specifically disallowed, in practice the relevant public sector contracting authorities never gave consent thereby limiting SME's ability to compete.

Thankfully this position changed in this years budget and it is now possible for firms supplying goods and services to government departments to assign public sector invoices to specialist debt financing lenders without prior approval. If your company would like to know more about factoring debts we recommend reading public sector debt factoring for more information.