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Alternative Finance Gaining Popularity

Alternative funding is growing as a finance option for small businesses. The difficulty many businesses are having in accessing the finance that they need is causing growth in alternative funding measures such as invoice factoring and invoice discounting. Conventional lending such as bank loans and overdrafts aren’t filling the funding gap – and this is being picked up by alternative lenders who are more willing to help small businesses with their lending requirements.

For example, the latest figures from the Asset Based Finance Association have shown that invoice discounting was up by 16% year on year last quarter, and was valued at £62.5 billion by the final quarter of last year. This compares to a £2.4 billion contraction in net lending recorded by the Bank of England during the same period. This shows that where traditional lenders are failing to deliver, alternative options are there for many businesses who might otherwise be turned down.

Invoice discounting is the most popular form of invoice finance. However, it’s most often suited to medium sized businesses who have a dedicated finance department. Invoice discounting allows your business to stay in control of collecting credit from customers – if your company needs more help with taking the strain of invoice collections then factoring could be a better option. This includes a whole credit control function which can help you to manage the day to day running of your business.

If your business is in need of alternative finance then invoice discounting or factoring could be the right option. If the banks aren’t lending, then you can still get access to finance through alternative lenders.

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