Invoice finance is frequently discussed as a means of generating capital to maintain cashflow, but there is another problem that it can help solve: late payment.

Late payment is a perennial bugbear for small businesses; every so often the issue is given some oxygen and possible solutions are discussed. This month the Federation of Small Businesses has revealed that more than half of its members were victims of late payment in 2013, which illustrates that the issue is far from being resolved.

According to the Federation, late payment had a marked impact on its members, reducing profitability, damaging business relationships and limiting business growth. As a result, it has renewed its call to the government to accelerate the rollout of the Prompt Payment Code scheme and generally improve the ability of SMEs to take effective action against late payers. At the same time, it has urged all small businesses to clearly state maximum and average payment terms.

Clearly, the issue of late payment has yet to be fully addressed and greater investment in the Prompt Payment Code scheme certainly seems essential. However, by using invoice finance, small businesses have another way of protecting themselves against the effects of late payment. By its very nature, invoice finance helps to keep payment within the specific payment terms while safeguarding business relationships. Its flexibility and transparency give SMEs another weapon in their financial armoury so that they may target growth.

If business confidence – which has reached the highest level in 22 years according to the latest BDO Business Trends report – is to be turned into quantifiable growth, late payment must be tackled. Invoice finance has a key role to play.

To find out more about A&T Business Associates services, contact us on 01903 602211 or info@atbusinessassociates.co.uk.