By Bibby Financial Services

Why now is the time for SMEs to embrace alternative finance

Economic uncertainty can have a paralysing effect on businesses of all sizes and having access to sufficient working capital is vital to ensure businesses are prepared for challenges and can respond efficiently to new opportunities.

It is more important than ever before that businesses consider the range of alternative financing options available. As well as a way to refinance and stabilise your cash flow, Invoice Finance can fund growth.

Invoice Finance can have a significant effect on an organisation’s success, providing the liquidity needed to grow, adapt, and make acquisitions or to simply help to manage day-to-day trading requirements. It offers a more flexible funding option as it increases in line with business growth.

Invoice Finance can give companies a competitive advantage.

It can also give many companies a competitive advantage as the release of funds provides confidence to make fast buying decisions. The facilities with Bad Debt Protection can also be hugely important - especially given the current business climate - as it ensures payment in the event of the formal insolvency of the customer, providing peace of mind.

If you find that your business is regularly facing shortfalls due to cash being tied up in late or unpaid invoices, then Invoice Finance can fill that gap. This funding can then be applied to a wide range of key business needs – everything from:

  • investing in infrastructure
  • business refinancing
  • international trading
  • mergers and acquisition funding

Many businesses experience extreme seasonal fluctuation in orders and payment, but they still must run plant, upgrade technology and invest in new materials and inventory year-round. Invoice Finance helps bring stability to this cycle through access to working capital and enable continued investment in growth. It can also support export activity. Risk aversion – particularly for smaller businesses – means some are slower to capitalise on high-growth markets abroad than others. SMEs may not have the capacity to chase payment and a lack of cash is a significant barrier to exporting success. It is here that the benefits of quickly unlocking cash from your unpaid invoices can help increase confidence in embracing new market opportunities.

Invoice Finance can be a great way to help businesses that need cash to reach the next level and is recognised by many as an established and credible form of finance. In fact, the Irish Asset and Invoice Finance Association (IAIFA) revealed that 1,600 SMEs used €28.6bn in Invoice Finance and other asset-based financing in 2019.

Paul Mulligan, founder of Chef in a Box, a maker of premium handmade meals in Drumshanbo, Co Leitrim, used Invoice Finance to support expansion of his business. It helped him to increase the number of supermarkets supplied from 60 to 159, pushing turnover from €1m to €2.5m.

Those businesses that have broadened their horizons and understand the range of funding options available to them will be best placed to take full advantage of the benefits of alternative finance.

  • Speak with our business finance experts and discover how Invoice Finance can support you - contact us today.

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