The Royal Bank of Scotland’s banking problems have dominated the headlines over the last week and its system failure has wreaked havoc not only for private customers but also for businesses. The disruption underlines the role of alternative SME finance, such as invoice finance.
As well as people being unable to complete house purchases, meet mortgage and other loan payments and even buy food, we’ve also heard about how businesses have been affected by the RBS software failure, which has hit customers at NatWest, Royal Bank of Scotland and Ulster Bank. One example is QED Scaffolding in St Helens, which reported that 200 staff were refusing to go on site over unpaid wages. The system failure would have also delayed payments to SMEs, interrupting cash flow.
The events of the last week shine a light on alternative SME finance services such as invoice discounting, factoring and asset finance, and not just as a short-term solution to the disruption caused by RBS’s problems. SME credit facilities such as invoice finance offer small businesses vital flexibility and reliability at a time when mainstream SME banking services are proving unattractive.
The challenges faced by small businesses in accessing SME credit has played a key role in establishing invoice discounting and factoring as important financial services, with businesses increasingly using them in conjunction with high-street banking products. The recent performance of RBS will only reinforce this role and underline the changing look of the SME banking landscape in the UK.
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