Late payment and bad debts continue to be a leading reason for the failure of SMEs. Invoice finance is an answer to this cashflow problem.

In a recent article about his new book Crew to Captain, David Mellor singles out the impact of failing to get paid and the resultant lack of liquidity. His list of five reasons why businesses do not succeed includes a failure to secure capital support. The issue of late payment is not a new one and neither is the solution.

The effect and extent of late payment in the SME sector are subjects that are regularly highlighted. However, for all the commentary and initiatives surrounding an answer, they remain a major problem. One solution is invoice finance.

The popularity of this alternative finance service has grown exponentially in recent years and, while it is lauded for its transparency, flexibility and affordability, its ability to combat late payment is often overlooked. Invoice finance can give SMEs more muscle in terms of securing payment on time without affecting business relationships.

Despite the upturn in economic conditions, it is clear that challenges remain for small businesses, in particular in the area of SME funding and cashflow. Data from the Hilton-Baird SME Trends Index, showing that only 27% of business owners and finance directors questioned consider backing from traditional lenders and government initiatives to be sufficient, underline how important a role alternative finance has to play in fostering SME sector growth, including with regard to the management of late payment.

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