In recent weeks, improving access to SME finance has been back on the front pages. However, for all the fresh debate, a new Lloyds TSB report shows that the age-old issue of late payment continues to plague small companies and that this is why invoice finance goes from strength to strength

The new Business in Britain survey from the high-street bank revealed that late payment and the impact of cashflow remain major problems for small companies. Over half the companies questioned in its survey that said they were experiencing cashflow problems put the blame on late payment. This figure represents only a slight fall compared to the 2012 report.

Hence, it is clear that many SMEs continue to be hamstrung by late payment and that better access to SME finance remains a core issue. So, what is being done to combat late payment? Much hope is being pinned to the Prompt Payment Code. However, much depends on how widely this code is adopted and, as adoption is voluntary, its success is far from guaranteed.

This is one reason why invoice finance is an attractive SME finance option. Invoice finance offers a means of ensuring prompt payment and improving cashflow without damaging business relationships. This protection against late payers has helped drive growth of this alternative finance product in recent years.

The Prompt Payment Code certainly has potential but there is an argument that it needs more lead in its pencil. The British Business Bank represents an opportunity to address what is clearly a major problem and the talk of the inclusion of some third-party finance services suggests it could provide the type of facility to tackle it. However, the lack of concrete details keeps the spotlight firmly on invoice finance.

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