In today’s unstable economic environment, SMEs need to make sure they’re making the right decisions when it comes to business finance. If you want your business to achieve growth and avoid getting tied up with tight cash flow, you need to have a plan. This is a plan that, nowadays, needs to consider alternative finance alongside more traditional financing options. The banks can’t always be relied upon to come through, so factoring, asset based lending and other routes to finance need to be considered as well. Factoring, one of the most well established alternative options, is one particular SME finance tool that is becoming much more popular.
During 2012, according to the Asset Based Finance Association (ABFA), the total number of businesses using invoice finance rose by 4%. This takes numbers up beyond 43,000 for businesses using these kind of services. amongst factoring services, invoice discounting is the most popular – from 17,300 businesses using invoice discounting at the beginning of 2012, numbers by the end of the year had risen to over 18,500
The mid-market in particular is making more use of asset based lending services, accounting for a 68% increase in the total volume of advances in the market. According to the ABFA there has been a total of £16 billion of funding advanced to businesses, an increase in 4% on the total amount of funding available.
This all shows that when it comes to business finance, the landscape is becoming more diverse and no longer revolves completely round the banks. While businesses need to take it on themselves to investigate the best financing options for their circumstances, it’s becoming more mainstream to opt for lending that lies outside the banks with independent lenders. Many independent factoring lenders will be more flexible than the big banks – so if you’re in a tight spot, it could be worth a call.