Invoice Finance: How the market has evolved

As is commonly known, cash flow is the key driver in the failure of new businesses. Invoice finance provides a way for enterprises to ensure their growth plans remain on track, and they aren’t held back by a lack of available funds.

Businesses which provide a service or a product may offer their customers trade or business credit, whereby they purchase goods now and pay later. This funding gap provokes a struggle amongst businesses to pay suppliers and meet their creditor liabilities, due to the time it takes their debtors to pay. Ultimately – this is restricting the growth of their business and the ability to develop and expand.

This is where invoice finance comes in; this type of finance bridges the gap in cash flow so businesses can continue to meet the needs of their customers on-going orders, without the worry of racking up extensive creditor pressure. Invoice finance is still an emerging industry, with more and more business owners using it as an alternative method of financing.

Matt Alis, Business Development Manager at Bibby, discusses how the invoice finance market has changed and why it’s now a more accepted type of finance for businesses:

“If we’re comparing bank loans & overdrafts to invoice finance – one of the main stumbling blocks business owners commonly find themselves questioning is the security requested by funders. Traditionally, if a business was to approach a bank for a loan or overdraft facility, they would give a personal guarantee supported by their property as security. With invoice finance, this isn’t the case and is therefore a much more attractive option to business owners and takes away the severity of developing business without such risk. Business owners have generally been more open to the idea of “secured” financing as a way to grow their business – and given we also support many start-up companies – it’s not imperative a company has two years trading history behind them to gain one of our products.

Over the past 10 years or so, there has been a big shift in what lenders are offering; as a c200 year old family-owned company – we are able to offer access to cash at an affordable rate, a much more flexible security structure and most importantly, allow flexibility within the facility – and look at each business individually. We compete against some of the world’s biggest high street banks and we currently hold c20% of the market share in invoice finance – meaning we compete with the likes of RBS, HSBC & Lloyds. In order for us to have achieved this – we’ve made our name by taking risk and providing less traditional facilities in industries a lot of competitors have not got an appetite to fund into. This is purely down to the experience of our worldwide team – and with 44 offices worldwide (19 of which are in the UK) – we are able to deliver an efficient, global offering and deal with more extensive requests that our clients may require.

Invoice finance is a way to actually borrow monies you are owed – as opposed to borrowing money that’s not yours. We offer Bad Debt Protection against the receivables (on a selective or full ledger basis) and can tailor a facility to suit a client’s needs.

Traditional banks do offer invoice finance, but their main focus is of course – on the banking. The evolution of specialist lenders, such as Bibby, means businesses can approach someone who is 100% dedicated to invoice finance and has invested all of its resources into developing a service which has made us the number one independent invoice financier. Flexibility is key and over the years we have developed a reputation for being flexible on what we lend on, who we can to and what security supports these facilities.

At Enness, we’re not only committed to securing our clients finance on the commercial unit from which to work, but also to helping them with business finance requirements so they can continue to be successful. As such, we work with specialist lenders – such as Bibby – to provide clients with a holistic service, from the fit-out of their workplace, to the collection of outstanding invoices. Visit our dedicated Enness Commercial division website to find our more about how we can support your invoice financing needs.

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