The popularity of invoice finance and asset-based lending has surged in recent years. As traditional lenders have become increasingly risk-averse, more businesses are recognising the benefits of these lending options and the unique support they can offer them to grow.
A recent UK Finance report states that such funding is up 13% year on year, reaching in excess of £22 billion across some 40,000 UK businesses at the end of March. This is the highest advances figure ever.
At Reach Commercial Finance, we’re experiencing phenomenal growth – far exceeding these percentage hikes – in both invoice finance and the alternative finance arena.
Our alternative finance client base has grown 80% in the last 12 months, raising £15 million in funding. We’ve also seen a 35% increase in invoice finance completions in the last year and a half. This is significantly higher than industry-wide stats, which show pure invoice finance lending figures reaching £18.93 billion at the end of Q4 2017 – an increase of 0.25% on the previous quarter.
As independent advisors – able to find the most appropriate solution from our extensive contact-base very quickly – our growing invoice finance completions is supported by a 5% increase in referral activity. We now have over 400 finance clients in our portfolio, benefiting from over £150 million of working capital facilities.
This surge in popularity of invoice finance comes down to it being a well-established, fuss-free source of funding to support a business’ growth. Today it helps tens of thousands of UK SMEs confidentially turn unpaid invoices into cash in the bank – which means they can continue trading, grow and invest to maintain their workforce.
There are a wide range of invoice finance products available, including factoring and invoice discounting – all of which allow businesses to raise funding.
Which businesses does invoice finance suit and why?
It’s a particularly popular option for service-led industries, such as recruitment consultancies, transportation and logistics companies and those offering professional services and construction.
At Reach Commercial Finance, we too have seen growth clients involved in manufacturing, distribution, recruitment and construction, but we are by no means limited to these sectors.
One of the key benefits of invoice finance is that it allows business owners to access cash without their customers knowing. It also helps overcome issues of late payment which, according to a recent study, puts the financial viability of one in four UK small businesses at risk. This is exactly this outcome that we work hard to avoid with our invoice finance products.
We partner with hundreds of UK businesses and their financial advisors to confidentially turn unpaid invoices into cash in the bank – overcoming late payment and cash-flow problems to free up the necessary working capital to operate and prosper.
Why do clients want to work with us?
The majority of our clients appoint us because we always spend time at the outset getting to know them. This enables us to fully understand their requirements, which makes for the subsequent swifter and more efficient identification of potential funders. We’ve built a leading specialist brokerage business on the back of it and the trust that it engenders.
We make sure we fully understand clients’ requirements from the outset and that we’re close to funders. The strength of these relationships gives us, as independent advisors, the time and ability to find the most appropriate solutions – of which we have many options to choose from, due to our wealth of expertise and contacts.
Here’s how a full invoice factoring facility brokered by Reach CF saved a Bristol-based mechanical engineering company.
Reach Commercial Finance was approached by a Bristol-based firm with a turnover of £1.5 million, that was experiencing financial difficulties.
By brokering a full invoice factoring facility worth £200,000, we enabled it to continue trading whilst saving all 22 local jobs.
The invoice finance facility that we designed maximised cashflow by releasing funds tied up in its unpaid accounts. In the meantime, our client was able to refocus on the day-to-day running of the business, safe in the knowledge that credit management specialists were looking after the collection of payments.
As well as negotiating and securing the deal, the Reach team also supported the client throughout the entire process. We gave them the confidence that a suitable funder, who understood the contractual nature of their business, would be found. It was essential to the client and its advisors that the funder must be co-operative and understand the mechanical engineering sector in which it operates.
We liaised with three potential funders before appointing Bristol-based Castle Business Finance as the most suitable lender. Then with broker, funder, advisor and client working collaboratively, the best and most flexible funding solution was secured.
Our client said: “We chose Reach as our commercial finance broker after discussions with a number of lenders. It was a decision based as much on its agility and speed of response as the time the team took to really get to know us as a business. Add to this their relationships with lenders – and the number of contacts they have – they quickly found a funding match that was right for us.”
For more about Reach Commercial Finance, visit http://www.reachcf.co.uk/or call 0800 993 0193. To find out what more clients and partner lenders think of Reach Commercial Finance, click here.