7 in 10 SMEs missing out on benefits of invoice finance 

New data from independent business finance provider, Time Finance, has revealed a lack of SME awareness and understanding of Invoice Finance with over 70% of the SME business community either unaware of or opting out of the cashflow finance solution. 

The data forms part of Time Finance’s Finance Apathy survey in partnership with Censuswide, which gathered insight from 500 SME owners and decision makers on their attitudes towards business finance. 

Delving into the awareness and use of Invoice Finance, the survey found that amongst SMEs, only 28% are aware of and using this finance solution, with 44% aware of Invoice Finance but choosing not to build it into their financial planning. 

Of those surveyed, 24% weren’t aware of Invoice Finance, ranking the product amongst the lesser-known business finance solutions alongside Asset Based Lending (ABL), which fell short in awareness for 36% of respondents. 

This compares with the more familiar forms of business finance, such as commercial loans, which 94% of SME respondents were aware of. Loans also topped the table of most utilised form of finance, used by 40% of respondents. 

The new data has been commissioned by Time Finance to understand the awareness and perception of different business finance amongst SMEs, to challenge growing apathy and help bridge the gap to unlock business growth.  

Highlighting the lack of SME awareness of Invoice Finance, Time Finance’s survey closely follows the launch of the Government’s Fair Payment Code and its plans to crack down on invoice late payment, which is estimated to cost SMEs £22,000 a year. 

Launched in September 2024, the new code will require all large businesses to include payment reporting in their annual reports, with consultation on further measures expected this year. 

“Despite years of pledges from the Government, the measures brought forward have failed to tackle the issue, and late payment continues to threaten businesses. At best it can stifle growth, and at worst it can threaten business survival. This is where the power of Invoice Finance comes in.  

“Invoice Finance has been a relatively unknown and misunderstood finance solution amongst businesses for years, and the most common misconception is that it is only useful to those with cashflow challenges. It’s true that it can inject capital into a business to help with overheads, but it is also a powerful tool to unlock investment opportunities. If a business owner has aspirations to grow but lacks the money to do so, they need look no further than their unpaid invoices to access working capital. 

“It’s no surprise that finance solutions such as loans are more familiar to businesses; we all know and use these solutions as consumers. What we want to do is broaden the minds of SMEs, and work with our broker partners to break down some of these barriers for businesses.”