Late payments driving UK SMEs towards invoice finance

New data from Time Finance has shown the growing popularity of invoice finance amongst the B2B community, with demand predicted to rise throughout the year as SMEs set out to stabilise their finances.

The new insight shows that invoice finance is ranked highest amongst alternative finance solutions, with 32% of financial intermediaries stating that invoice finance will be the most popular service to support cashflow this year.

The data forms part of a large-scale review conducted by Time Finance to understand the financial challenges facing businesses, enabling the firm to tailor solutions that better serve the needs of its customers.

As part of the review, Time Finance also shed light on the impact of late customer payments, finding that SMEs are owed an average of £250k in unpaid invoices and some are waiting between up to 120 days for payments to come through.

Phil Chesham (pictured), Managing Director of Invoice Finance at Time Finance, commented: “We are seeing a real uplift in businesses that come to us for invoice finance, and this is definitely a trend we expect to see continue throughout 2023. At face value, this is an indicator of the cashflow challenges that businesses are experiencing, but looking at this more positively, we can take this as a sign that more businesses are discovering the real value of invoice finance.

“Invoice Finance is a helpful tool to manage cashflow and when harnessed as a part of a long-term financial strategy, it can ensure that a business has an uninterrupted supply of working capital in the bank. As a result, invoice finance enables businesses to inject their own money into their investment plans, whether that’s recruitment, skills development, equipment or marketing.”

For Norwich-based energy consultancy, Indigo Swan, a six-figure invoice finance facility with Time Finance has enabled the acceleration of investment in sustainability and its support for the UK’s decarbonisation journey.

James Groves, Managing Director of Indigo Swan, commented: “As a small business it’s been challenging to secure the funding we need from traditional lending routes, and for us it felt important to partner with a funder that listens to, understands, and has confidence in our ambitions.”

As well as facilitating a management buy-out, Indigo Swan’s invoice finance facility will assist a range of new initiatives, including introducing new technology, processes, and systems to streamline the energy procurement process and enable businesses to reduce their energy consumption and environmental impact.