Many businesses are increasingly using ‘quick fix’ financial solutions – and this isn’t good news. Overdrafts and business credit cards are some of the most common routes taken, but with Wonga short term business loans launching there are even more options out there. However, figures suggest that firms opting for these short term solutions rarely benefit from them. Instead, more bespoke solutions such as invoice finance can be a better option.
Research by Hilton Baird Financial Services showed that of the 454 business owners interviewed, over half relied on business credit cards, with only 18% using bespoke financial solutions. Those businesses using overdrafts and credit cards often experience fall out from this choice, such as lower turnover, slow productivity and reduced business growth.
However, for those companies who are well informed about their options, there are many more solutions that can bring some real benefits. For example, companies who were using invoice finance often experienced a growth in turnover 57% higher than those who used overdraft facilities or credit cards.
Many businesses are seeking these methods of finance as they need to gain access to additional funding in order to ease cash flow management issues. Inability to access finance and generating new business were identified as key concerns over the new six months.
This all shows that many businesses are taking a short term approach to finance as they are continually squeezed by harsh economic circumstances and late customer payments. Often this is considered an easy option, but those businesses who are more aware of beneficial means to finance often go in a different direction. Exploring all your finance options is vital in making he right decision.
Invoice factoring is one of these solutions that can help to bridge the funding gap without a company taking on any new or expensive debt. If your business issues invoices to customers, then you might be able to release capital tied up in your sales ledger to ease your cash flow issues.