As rising costs and post-Brexit uncertainty continue to put pressure on SMEs, the use of invoice finance by UK businesses has broken through the £20 billion barrier.

If there was a sure sign that alternative finance is providing a lifeline to small businesses in the UK it is the latest news on invoice finance use from the Asset Based Finance Association. According to the organisation, the amount of invoice finance and asset-based lending secured by UK companies has increased by over a quarter since 2011/12, with lending passing the £20 billion mark in 2016. The data underline the role of invoice finance as a critical source of working capital for growth and acquisition.

The rate at which invoice finance and asset-based lending use is growing illustrates the ongoing struggles that small businesses have in securing finance and the extent to which these companies have stepped away from traditional lenders despite big banks doing more recently to win back SMEs.

The uncertainty of the post-Brexit marketplace, both in terms of the impact on the business environment in the UK (SME confidence fell at its fastest rate since the beginning of 2009 in Q2 according to the latest CBI Quarterly SME trends survey) and the willingness of traditional lenders to lend to small businesses, means that the importance of alternative finance, including invoice finance, is set to grow even more.

Small business owners face a number of demands on cashflow, including auto-enrolment, cybersecurity and the National Living Wage. Missing cheques should be added to this list according to Barclays Business bank. New research by the bank has shown that SMEs are losing over £500 million every year as a result of lost cheques. This news from Barclays is yet another reason for businesses to make invoice finance part of their financial services strategy.

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