Improve Cash Flow
More than half of UK small businesses fail each year due to cash flow problems and even though the order books may now be showing signs of improving coming out of the recession, the amount of UK businesses expected to fail is also on the rise.
If orders are rising, why are businesses still failing?
With more UK businesses not adhering to the Government's prompt payment code than those signed up to it, it is clear that many UK businesses (of all sizes) are not paying their invoices when due.
When invoices are not paid on time, the knock on effect to the supplying company can, and often does result in failure. Many businesses are then forced to delay their own payments and a vicious cycle ensues. Payments between businesses in the UK are typically made 20 or more days beyond agreed term. With 80 businesses a week failing as a direct consequence of late payment and costing UK businesses more £180 million in debt interest charges alone, late payment problems are not showing sign of reducing.
How can Invoice Finance help Cash Flow?
If for example, your client has 90 day invoice terms but by day 120 you are only getting paid, you will not be alone.
1) Can your business manage four months of capital tied up in that invoice?
2) Will that tied up capital stop you buying in goods/services to fulfil new orders?
3) Will that tied up capital prevent you paying staff wages, VAT or HMRC liabilities or your creditors?
Invoice Finance takes that 120 day payment delay and effectively reduces it to just 1 day.
Normally, within 24 hours of issuing the invoice to your customer, invoice financing can advance you up to 90% of your outstanding invoice. The next working day the money can be sitting in your bank account, freeing up your capital to reinvest in the business, without delay.