RAISING THE PROFILE OF INVOICE FINANCE
Our recent survey of 100 SME's (small and medium sized enterprises) indicated that 59% of SME's anticipate problems raising business finance during 2011.
Last year we asked the same question and 71% said the same thing. This suggests an improvement in expectations about the ease of raising business finance, it also remains a strikingly high number of businesses that are anticipating problems finding business finance.
Of those that said they were anticipating problems raising finance we asked them about their reasons. These were their responses:
- 39% Banks are cutting back
- 29% VAT/tax arrears
- 25% Losing customers
- 5% My provider is becoming increasingly cautious & less flexible
- 2% My credit rating is poor
This perception of finance not being available from banks is not consistent with our understanding that some of the major banks are struggling to meet the lending targets agreed with the government.
In addition, all of the reasons given for anticipated problems in raising finance can be overcome via invoice finance. Invoice finance is still freely available, including invoice finance from bank owed providers, even if a business is losing customers, has tax arrears or has a poor credit history. In fact, invoice finance is often the natural solution in these situations where more traditional forms of finance such as overdraft or loans may not be available.
Somehow this message is not getting through to the business population. This highlights the need for a platform to raise the profile of the invoice finance industry. This will enable a change in the perceptions of businesses from an expectation of problems raising finance to the use of invoice finance as a natural solution.
Glenn Blackman MBA MCIM writes regarding invoice finance and related matters at: http://www.glennblackman.co.uk/. Glenn is also the Managing Director of Cashflow Acceleration Limited, a specialist invoice finance brokerage.
