In 2017, almost half of all small to medium UK enterprises turned down a contract or order because they couldn’t deliver the work due to a lack of available finance; a trend that is expected to continue in 2018.
According to new data the demand for invoice finance is expected to grow by 21 per cent this year in comparison to 2017.
Last year’s lending figures were also eminent throughout spring and summer, with SME’s most likely to seek invoice finance between May and August.
Overall enquiries for cashflow finance also increased significantly in June, suggesting seasonal demand. Staff holidays and overall reduced business hours have a consequential impact on the demand for such funding.
Cashflow trends 2017
A look back at when and which businesses took out Invoice Finance in 2017
Another key financial takeaway from 2017 is how in November, the official bank rate increased for the first time since July 2007 from 0.25 per cent to 0.5 per cent, which may leave business owners asking if this could negatively impact their finance rates when using a third party lender.
Andy Dodd, Managing Director at Hitachi Capital Invoice Finance commented:
“Whilst the Bank of England base rate has risen, it’s still historically very low and not anticipated to rise substantially in the short or medium term. A sound business will match its method of borrowing to the asset being financed and on which the debt is secured. This means cashflow finance represents some of the lowest interest rates and most flexible methods of finance which rises and falls with fluctuations in turnover. Therefore, if the business has sound profit margins, the cost of interest will behave like a variable cost moving in line with turnover. Crucially, a good cashflow finance provider will ensure that the collection of debtor invoices is efficiently and professionally carried out to minimise the amount that needs to be borrowed, mitigating future interest rate rises.”
The ‘2018 Cashflow Calendar’ identifies key dates and financial events throughout the year that could influence a business’s cashflow and guide business owners to help better manage available funds.