It’s estimated that one million SMEs in the UK currently unaware of alternative finance sources

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A high percentage of SMEs operating in the UK are oblivious to how factoring can improve cashflow for their business, according to Touch Financial, one of the UK’s leading independent brokers.

To highlight this, Touch Financial has produced a guide for SMEs. Knowing where to find new sources of finance can be a big issue, as Simon Carter, Director of Touch Financial, explains:

“Financing is available, SMEs just need to know where to look. For instance, factoring is a type of cashflow funding that allows businesses to receive money from unpaid invoices. Not all businesses are aware of this, so the guide will give a clearer understanding of how best to utilise possible cashflow sources.”



He emphasises that the practice is ideal for growing SMEs.

“The more invoices a company generates, the more cash it receives, so factoring really rewards growing businesses and encourages growth rather than holding it back.”



The guide highlights that the costs for an invoice finance facility are little more than those for an overdraft, but on average deliver two times more cashflow than an overdraft for clients with tangible security, and four times more cashflow for clients without.



Simon adds, “Having cash up front enables businesses to pay their suppliers more promptly, negotiate better terms and take full advantage of supplier discounts for early settlement. Also, with factoring, the credit management side, including collections is taken care of by the lender, allowing businesses to get on with doing what they do best.

“What is more, an invoice finance arrangement with a lender can also include valuable credit protection, shielding clients from the risk of debtors who are unable to pay due to financial difficulties or insolvency.”

www.touchfinancial.co.uk/factoring-infographic