How invoice financing can get businesses back on track in 2021


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Funding bills will have an important role to play throughout the pandemic recovery.

That’s what some of the key people in the financial industry are saying who have urged companies to think about cash flow before funds run out.

At a recent online panel, hosted and hosted by Optimum Finance, a selection of business owners and executives came together to explore how invoice finance can get businesses back on track in 2021.

Representatives of organizations from across the UK joined the debate.

They understood; Ant Persse, CEO of Optimum Finance, Philip King, Small Business Commissioner, Warren Ralls of British Business Bank (BBB), Josh Levy, CEO of Ultimate Finance, Evette Orams, CEO of Hilton-Baird, Steve Noble , Managing Director at Reward Capital, Martine Catton, CCO of Just Cashflow and James Hawksworth of RSM.

In the second part of our post-coverage article, Philip King, the Small Business Commissioner, said that too often businesses fail when their funds are depleted.

Philip King, the Small Business Commissioner

“The timing of the money is critical,” he said.

“Small businesses in particular only think about cash when it’s depleted, so they don’t think about it all the time, and all too often they don’t plan or manage it properly.

“When the recession comes out, the impact on cash flow will be greater.

“As businesses recover and invest more, they will need financing to support growth and invoice financing is one of those tools that businesses will need to consider.

“And we’re going to need various mechanisms to raise funds as a business as it starts paying off loans like CBILs when they come due and tax exemptions end and so on.

“Money is going to be the key. I would like to think that (invoice financing) is one of the tools that is used and operated effectively.

James Hawksworth of RSM suggested that companies take May and June as the time period to focus on their projections and cash flow before legislation changes and liquidation restrictions fall in late June.

“The period leading up to the end of June is really when companies should look at their projections and understand what kind of cash and working capital they might need in July and beyond. Invoice financing will play a key role in help support them.

Steve Noble, Managing Director of Reward Capital, added, “You have to be able to find a product for times of recession and growth.

“Bill financing has been around for over 50 years and has become increasingly versatile over time as we have moved from a manufacturing nation to a service nation.

According to UK Finance, only 35,000 UK businesses use invoice financing.

When asked why these companies weren’t using invoice financing to help them unlock that money, Evette Orams, Managing Director of Hilton-Baird, pointed to a survey the company carried out a few years ago, which showed that there were still misconceptions and preconceptions about him.

“Those who could use invoice financing but chose not to use it and manage their debt in another way found it complicated. They see bill financing as complex and they are afraid of it and if you ask them why they thought it was complex they might indicate that someone they are trading with has said so.

Warren Ralls of the British Business Bank (BBB) ​​said: “We have our own small business financial market report that we publish every year.

“In terms of invoice financing, only 45% of the 4,000 SMEs we interviewed really know about invoice financing. But of that 45%, only 1% actually use invoice financing.

“So we need a certain awareness on this subject. There is certainly nervousness about the SME client being called by someone else looking for payment, which implies that the SME is in difficulty. This question needs to be explored further.

Philip King said: “I talk to a lot of micro businesses, most of them see the only funding opportunity as overdraft and when that doesn’t work they turn to their friends and family.

“Anything beyond that is too complex, too difficult, too dangerous, too risky. They don’t understand it, so they turn away from it.

“I think we, as a group of stakeholders, need to elevate the game so that companies understand what is available, how it can be used in practice and what it means to them.”

King said invoice financing is often seen as a last-ditch attempt after companies have already sought help from their traditional lenders. Instead, invoice financing should be viewed as a value-added product that can work with a set of term loans that meet the financial needs of a business.

“It’s not the way the industry generally works, and I think it’s to the detriment of profitable businesses.

“So we have to elevate the game to get businesses to understand what the product is and what it can do for them, and how they work and how they can really benefit from it. “

Josh Levy, CEO of Ultimate Finance, also agreed there was still a perception issue.

“There are still some misconceptions, but the end user doesn’t care about the product and the different features, what interests them is a solution to their problem, and that’s what we owe focus. “

When asked if invoice financing is suitable for the modern technological world where payments can be made instantly, the panel agreed that automation has accelerated over the past 18 months, but it is also essential. to keep the human element of the company.

Evette said: “At the end of the day we are a business of people and sometimes the computer can easily say no.

“Relationships are really important because you want to be able to pick up the phone and talk to someone if you have a problem. “

Ant Persse, CEO, Optimum Finance

Ant Persse added, “Our business is all about relationships. We all offer facilities with relationship managers sitting behind them to help eliminate that fear and complexity that was mentioned earlier.

“Bill financing should be simple and you don’t have to overcomplicate it with jargon.

“The technology is here and it’s accelerating with API, open banking and cloud accounting integrations. It all speeds things up, but you tie that in with the relationships, and we’ve got a winner. “

He continued, “There are three main areas where I think invoice financing needs to go. One is the speed and the rapid flow of money to businesses. Second, the emphasis on simplicity and how we can facilitate the whole process through technology by accessing open banking and linking it to private accounting platforms.

“And third, let’s make it convenient so SMBs can access what they need on their phones when they’re on the go.

“This is what the technology is going to drive. It’s speed, simplicity, and convenience, but it’s also having relationships that make it work.

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