PRESS RELEASE
Release date: 11th
November 2013
UK
businesses warned: ‘Don’t bank on traditional forms of finance’
UK businesses need to follow the
lead of the construction industry by relinquishing their reliance on banks and
seeking out other forms of finance if they are to overcome barriers to growth.
That’s the message from specialist funding provider Cranfield Business Finance,
which is citing alternative means of funding such as invoice financing as the
key to developing Britain’s businesses.
The Midlands-based firm cites
recent figures from the latest Manufacturing Advisory Service (MAS) Barometer
which state 67% of SMEs (small and medium sized enterprises) predict expansion
over the next two to three years, but, with banks remaining reluctant to lend
funds, access to finance is still holding companies back.
Alternative means of funding,
particularly invoice financing, which offers short-term lending to businesses,
are vital to fuelling business growth.
Patrick
Murtagh, Director of Cranfield Business Finance, highlights the construction
sector as one that has begun to rely on invoice financing as a way of accessing
much-needed business funds. This follows an announcement by the Federation of
Master Builders earlier this year that a quarter of its members had missed out
on projects after being refused funding through traditional methods.
Banking finance currently
accounts for 80% of funding for SMEs in the UK, which compares with just 30% in
the USA, but with bank loans still difficult to secure, Cranfield is stressing
that it is time for UK businesses to step back from their reliance on
traditional sources and seek alternatives.
“Businesses cannot sit on
their hands and wait for banks and other traditional lenders to loosen the
purse strings. If conditions are right to expand now, they need to choose a
fresh approach to finance so they grab that opportunity,” said Mr Murtagh.
“While predictions of growth
across a number of sectors is excellent news, the lack of traditional funding
and the ever-present problem of late payment means there is likely to be a
funding gap. For too long, businesses have not been investigating the full range
of funding solutions that may be available to them. This has to change.”
A recent report by the British
Chambers of Commerce revealed the extent of the late payment problems in a
survey of SMEs. Its research showed 94% of respondents had been paid late, while
almost a quarter (24%) of those asked experienced delays with more than 40% of
their payments.
Once
dismissed as a controversial way to fund business, invoice finance is now a
popular method of funding in the construction industry and other sectors can
learn from this trend.
Factoring
is a disclosed facility which incorporates credit control, debt collection and
funding, and can also include bad debt protection. Invoice discounting is
a funding only solution. It is usually confidential, and leaves the credit
management to the individual company. This service can also include bad debt
protection.
Mr Murtagh explained: “Invoice
discounting can be seen as a different type of short-term borrowing, which
enables a business to borrow a percentage of its unpaid invoice from a finance
company. However, in this instance the business is still responsible for
chasing the debt – and not the finance company that has made the loan. This
applies to confidential invoice discounting.
“There are five million SMEs across the
UK and if 67% of them predict they are going to grow over the next two to three
years that will make a huge difference to this country’s economic prospects.”
“However, it is important for any SME
that is looking to find alternative funding seeks support from an established
company that provides a good deal so that it can achieve growth.”
- ENDS -
About Cranfield Business Finance
Cranfield Business Finance provides a range of
financial solutions to meet the needs of businesses across the Midlands,
Warwickshire and Gloucestershire regions. It is part of the Cranfield
group of companies, which also comprises Cranfield Business Recovery.
The Cranfield Business Finance team has over 25
years banking experience which gives them the necessary skills and experience
to help SMEs, whether it’s improving the flow of funds or buying a new premises
or even if companies are looking for a partner for a development project.
The services offered are completely independent
and impartial, which means they are not tied to any lenders and will search the
market for the right relationship for their clients.
For more information contact
John Edden, Bridge PR & Media
Services Tel: 024 76 520025, Email: john@bridgepr.co.uk or
Patrick Murtagh, Cranfield Business
Recovery, Tel: 024 7655 3700, Email: patrick.murtagh@cranfieldbusinessrecovery.co.uk.