Late payment debt worries

08/07/2010

UK SMEs are finding both accessing finance for business and late payments a challenge, according to Hilton-Baird’s first SME Trend Index.

The study revealed only 12% of SMEs questioned had secured new business finance over the past six months, with many turning to unconventional methods, such as credit cards, to combat late payment debts.

While bank overdrafts remains SMEs’ preferred method of accessing funds, with 41% of the sample saying they’d used this source over the past six months, 35% admitted to using credit cards as a means to meeting their working capital needs.

Loans from friends and family were also high on the list of methods of raising business finance, with 23% opting for this route.

The results show SMEs are still feeling the impacts of the recession, as confidence has been slow to return during the limp towards recovery, resulting in many having to resort to pursuing potentially risky short term strategies to keep cash flowing.

In these difficult times it is imperative SMEs consider all the options available to them such as alternative business finance solutions like invoice finance, factoring and invoice discounting which allow companies to access cash quickly and easily against their sales ledger.

Invoice finance facilities can assist with late payment issues as they often incorporate up to 120 days funding from invoice date and can potentially include non-recourse options to incorporate debtor protection to guard against failure or protracted default.

Managing Director of Hilton-Baird Financial Solutions, Evette Orams, said: “During the early days of recovery, identifying the right type of flexible funding to keep on top of day to day demands can prove challenging and, with late payment and bad debt potentially continuing to be an issue, life can still be extremely testing for businesses of all sizes.

“It’s inevitable that when faced with strained cash flow, SMEs will seek alternative methods of gaining access to funds– but they would do well to steer clear of short term, costly and inflexible methods, such as credit cards, which could offer more long term risk than reward.”

For further information on how these changes could affect your business, or for assistance on what finance for business could boost your company’s cash flow, please contact one of our funding consultants on 0800 9774833.

Read the complete findings here

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For further enquiries, please contact Helen Tramaseur or Jamie Weeden at Hilton-Baird Group on 02380 706637 or email helen.tramaseur@hiltonbaird.co.uk / jamie.weeden@hiltonbaird.co.uk

Note to editors:

Evette Orams is Managing Director of Hilton-Baird Financial Solutions, which is part of the Hilton-Baird Group of companies. As an independent introducing agent, Hilton-Baird’s aim is to clearly identify their clients’ business requirements and match them up with relevant providers. The Group prides itself on maintaining excellent relationships with a broad spectrum of lenders and constantly delivering positive and innovative financial solutions.

Hilton-Baird Financial Solutions was voted Asset Based Finance Broker of the Year 2009 & 2010, demonstrating its reputation and the trust its clients place in its service.

The business’ affiliations to the leading financial industrial bodies, the Asset Based Finance Association (ABFA), the Finance and Leasing Association (FLA) and the National Association of Commercial Finance Brokers (NACFB), ensures it maintains the highest level of standards for its clients.

Hilton-Baird Financial Solutions helps businesses of all sizes to fulfil their potential by introducing the most suitable cash flow solutions. Read recent success stories here.

To find out how Hilton-Baird can assist, contact Evette on: 0800 9774833.