Banking on a bright future
Access to finance continues to be a real issue for small businesses, with many falling short of strict lending criteria.
The new Government has pledged to work with the banks to improve the way they deal with small businesses, but the reality is that many need funding now.
The Treasury has drawn up new lending targets for the Government-owned banks, including the Royal Bank of Scotland and Lloyds Banking Group, and Chancellor George Osborne’s recently announced green paper on business finance includes a warning that he could ask all banks to sign lending agreements if they fail to increase the supply of funding to small businesses.
This should have a positive impact and increase the amount of credit available to small and medium-sized companies in the future, but unfortunately it does not support businesses in the short term.
In addition, the introduction of the bank levy, announced in the recent emergency budget, may force lenders to take a risk averse approach and limit the level of funding available to small businesses.
Andrew Bullard, head of business at specialist invoice finance broker Cashflow UK, said: “At the moment, the lending situation with the banks and the Government is not helping businesses that need cash right now.
“By the time credit starts flowing through the banking system, it could be too late for many companies.
“A constant cash flow is the lifeblood of a business and many businesses are victims of late paying customers.
“Factoring and invoice discounting as a funding solution ensures funds are released from issued invoices in a matter of hours, instantly improving cash flow and allowing businesses to get on with focusing on the job in hand.”
Small businesses have been telling Business Secretary Vince Cable that they are being forced to find other ways to obtain credit because of the difficulty in obtaining conventional lending from the banks. Key players in these discussions should be the factoring and invoice discounting industry.
The solution is simple, according to Mr Bullard.
“Factoring and invoice discounting are straightforward forms of finance that are proven to work whatever the economic situation.
“The fact is that business owners don’t need the banks or the Government to find funds. All they need to do is pick up the telephone to a specialist invoice finance broker like Cashflow UK.
“The broker will then assess their needs and find the best financial solution for their business.”
Firms can put the responsibility for collecting payments from their invoices with a specialist, allowing them to get on with growing their business.
As a result, companies are free of the credit squeeze and are not left waiting for decisions on lending that may ultimately be declined.
Yet small business owners have a right to gain access to the rationale behind a lender’s assessment. It is ironic that as banks have become more risk averse they are requesting an ever increasing amount of information from applicants, yet many do not feel the need to justify their lending decisions.
Cashflow UK are the country’s leading finance brokerage specialising in factoring and invoice discounting and their specialist team of financial experts are able to offer impartial advice and find your client the best provider.
If you have a potential client situation, contact Cashflow UK today on 0800 132 156.
