Why choose invoice finance?

SMEs choosing invoice finance

Recent research has discovered why SMEs are choosing invoice finance products. 

Close Brothers Business Barometer asked over 900 SMEs in the UK and Ireland their motivations for selecting invoice finance or asset based lending instead of traditional bank loans and overdrafts.

Before using invoice finance, a quarter of firms were interested because they thought the product may be cheaper than other options on offer. Meanwhile, another quarter wanted a fast way to access cash, and believe this type of funding is a quick option.

The responses disclose that company chairmen are motivated by cost of the product, with a third hoping it would be an affordable option. In contrast, over two thirds financial directors/CFOs were driven by the speed of acquiring funding.

Once companies begin using invoice finance their reasons change. The majority of respondents found the product simple to use, and cite this as their main reason for continuing to use it. Additionally, one in five firms feel it is the best way to access cash.

Research has also revealed why SMEs want to take out finance in the coming year. 47% company chairmen are keen to invest in new equipment, while 48% CEOs are looking to hire new staff. Products such as invoice discounting or factoring are flexible options to fund these investments, as the amount borrowed can grow along with business. An additional product is asset based lending, where invoice finance is coupled with capital released against other business assets such as stock, property, and plant and machinery. Asset based lending is ideal for larger businesses looking to raiser higher amounts.

There are many benefits to working with a partner such as Close Brothers, including access to personal advisors who can help find the right business funding with industry-specific financial planning. The IDeal™ platform is a great solution for simple access to capital to aid growth through invoice discounting.

Close Brothers’ award-winning software, IDeal™, is an easy-to-use, reliable way to regulate cash flow. The self-reconciling program provides fast access to funds, as once invoices are raised money is paid instantly. By being supported by IDeal™, capital can be allocated for investments such as purchasing new equipment, hiring staff and growing trade.


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