New data from the Insolvency Service has shown an increase in corporate insolvency, a trend that underlines the current challenging conditions for small businesses, but also puts a spotlight on SME finance and the role of alternative SME credit services, such as invoice finance.
Late payment from customers was highlighted by the Insolvency Service as a leading reason behind corporate insolvency, with the annual survey finding that businesses had to wait an average of 17 days beyond agreed payment deadlines for their invoices to be paid over the period. Late payment is nothing new to the SME sector – reports at the end of last year showed that small and medium-sized businesses were owed over £33 billion.
So, what’s the answer to the problem of late payments? Alternative SME finance, including the likes of invoice discounting and factoring, is one. This sector has steadily grown in popularity, enabling SMEs to generate capital and maintain cash flow at critical times, such as when they’re affected by late payments.
As mainstream banks have become more cautious about small business lending and have made overdraft and loan terms stricter, alternative SME credit facilities like invoice finance and asset finance have stepped in to fill the gap. These services are allowing healthy SMEs to remain that way: invoice discounting and factoring encourages clients to pay on time, protecting against the threat of insolvency.
To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk