SMEs face new cash flow demands

The new National Living Wage is set to dramatically increase the cost of labour, while new immigration laws will prevent employees who earn less than £35,000 from staying in the UK for more than five years.

The Asset Based Finance Association has found that SMEs now wait 72 days on average for an invoice to be paid and Lloyds Bank has also uncovered that UK SMEs are owed more than £500bn by customers.

Steve Everett, Head of Product and Proposition for Lloyds Bank Global Transaction Banking, felt there was little hope for respite among SMEs but offered advice on how businesses can enhance their cash flow.

“Invoice finance can provide the sure footing to get through the tough weeks ahead. 

“It enables enterprises to unlock cash flow tied up in delayed payments by providing access to up to 90% of the value of issued invoices, all within 24 hours. 

“So if a business wants to continue growing, irrespective of late payments, this can be an ideal solution.”

Steve added that Lloyds’ Business in Britain survey revealed that the average SME had more than £600,000 in physical assets, usually owning more than three quarters of those assets outright.

“Asset-based finance can convert the value tied up in stock, plant, machinery or property into the cash needed to face new challenges and position a business for growth.

“These forms of finance should form an indispensable part of a business’ toolkit, but despite recent figures from the Asset Based Finance Association which indicate that this form of finance is on the rise, many SMEs aren’t aware of these options. 

“Businesses are currently facing a number of new headwinds, all of which will affect their working capital. 

“Looking at ways to unlock the value tied up in their assets will better place them to deal with these new pressures and ensure their aspirations for growth are not hampered.”