The biggest problem facing businesses looking for alternative finance is the awareness of the solutions that are out there. Though there have been reports on the failure of bank finance to provide for the small business sector, this is only of limited value unless businesses are made more aware of the alternative solutions which are available. Invoice discounting and factoring have been marked out as important for the UK economy in 2012.
The Breedon report recently forecasted a shortfall in small business funding of nearly £200billion over the next five years. However, it also argues that one of the biggest problems in solving this is the lack of awareness of the other solutions out there.
Invoice finance, such as factoring and invoice discounting, was identified by the report as one of the most important ways for small businesses to get access to funds quickly, securely and flexibly.
The government is promoting alternative methods of finance, as well as schemes to encourage banks, but these need to be encouraged more to solve the funding problem. Non-bank finance is going to be key in reinvigorating the UK economy, and improving the dismal growth rates of the first quarter of 2012.
Though there’s no ‘silver bullet’ solution to the credit problem for small businesses, awareness is one of the first steps to solving the problem.
Paul Barnsley, COO of The Interface Finance Group, commented that this was the biggest barrier: ‘It surprises me that certain businesses, like those in the construction industry, don’t think they qualify for invoice finance, but they do.’
For businesses that are caught up in supply chains, or suffer from cash flow or late payment problems, invoice finance is looking to be key in helping the small business sector get access to the funds that are needed. Factoring and invoice discounting can offer valuable funding by unlocking cash tied up in unpaid invoices.
Select Factoring offers a range of solutions for small business who are looking to alternative finance for their funding solutions.