Why? Because many SMEs lack large financial departments. When businesses are just getting started, the slightest setback can scupper operations before they’ve even had a chance to establish themselves.
The main problem is that SMEs generally lack the reputation, and the business clout, enjoyed by larger multinationals. So whereas a supplier might make a point of maintaining a good working relationship with the likes of Tesco; a smaller, independent store, particularly one with a less than perfect credit history, might be viewed as less of a priority.
Similarly, your clients may work with numerous businesses of all sizes. Should they have a less than successful month, they may decide to let some of their due payments slide. And when looking at their finances, who do you think is more likely to get their attention – their multinational energy providers, or you, the SME with whom they’ve only been working for a few months anyway?
In the business world, whoever shouts the loudest gets the most attention, and few are able to shout louder than big businesses. Unfortunately, when times are hard, it’s invariably SMEs that pay the price.
So How Can Invoice Factoring Help?
For SMEs, and those who are just starting out, invoice factoring can act as something of a safety net. Should your suppliers or your clients ever let you down, we’ll be here to help.
We will manage your sales ledger on your behalf, taking it upon ourselves to collect the money you’re owed. In the meantime, having bought the debt owed to you by your customer, we’ll make a percentage of the cost available to you upfront. This can be up to 90% of the full amount.
This means that there’ll be no interruption to your cash flow, which means that your business’s credit rating will not suffer, and that you’ll be able to cover all your overheads. And through doing this, your credit rating will never suffer, which means that your suppliers will never question working with you.
Once we’ve collected the full amount from your customer, we’ll make the remaining balance available to you – minus interest and fees.
Invoice factoring is a flexible, cost-effective alternative to working with a bank overdraft. It enables fledgling businesses and SMEs to continue to operate, even when faced with difficult customers and clients.
Through enabling your business to finance itself using its own assets, invoice factoring is an excellent strategy for SME success. Click here to learn more.