SMEs in the South East face an average seven-week wait for invoices to be paid, according to new statistics from Clydesdale Bank. Not only does this put pressure on cash flow it can also threaten the survival of thousands of SMEs.
In a bid to support small businesses facing invoice delays, Clydesdale Bank has reaffirmed its strong support for the invoice finance market by ring-fencing £100 million for cash flow finance from its recently launched £1billion Business Expansion Fund.
The £100 million of additional invoice finance funding is now available to both new and existing customers through the Bank’s Confidential Invoice Discounting service.
Often referred to as “cash flow finance”, invoice finance allows businesses to access up to 85% of an invoice’s value as soon as it is issued, rather than wait for it to be settled.
In the last year, the Bank has seen businesses increasingly looking to strengthen their own invoicing and credit control procedures using invoice finance and credit protection products.
Despite businesses’ best efforts, many are concerned about the threat of late payments. Research from the Bank has revealed that one in 10 small businesses believe they would be forced to drastically restructure their business or even face closure if their customers took 90 days to pay invoices.
Particular types of businesses which are more prone to suffering from late payment of bills include those most affected by the economic downturn, such as construction companies, and those with shorter credit periods from their suppliers, such as fuel providers.
Cash flow experts at Clydesdale Bank believe a strong invoice finance service is crucial for the South East’s SME community in the current economy.
Andrew Merrifield, Regional Director for Clydesdale Bank in the South East, said: “Underlining our enduring commitment to the invoice finance market, this £100 million of additional funding will provide real support for many businesses.
“Late payments can put immense pressure on small businesses as cash flow dries up, leading to pressure on their ability to pay their own bills.
“Providing an invoice finance service which suits new and existing customers is a key part of our support for UK businesses, particularly those which are working harder than ever to compete in some very challenging economic conditions.
“From our research we know that cash flow and invoices being paid on time are still a primary concern for SMEs. Cash flow is the lifeblood of a business and invoice finance is an extremely useful tool for SME owners. It’s something that more businesses could benefit from accessing.”
The pledge forms part of the Bank’s £1billion Business Expansion Fund and Growing Business initiative for companies looking to start up, expand or switch their banking arrangements. The lending will be available through Clydesdale Bank’s region-wide network of Business and Private Banking centres.