Invoice finance for the good, the bad and during the ugly.
While banks are known for lending during good times, they have a tendency of pulling the plug when things get ugly and funding is needed the most. Therefore, many businesses often shy away from finance arrangements that carry a high possibility of burning them if times get tough.
The ongoing liquidity crisis will most likely be intensified, as banks are more conservative and are scaling back lending due to tougher, more stringent credit policies.
If SMEs look at (invoice financing) factoring, they stand to get cash-in-the-bank, while select receivables are removed from their balance sheet. This results in improved leverage for the company, giving them room to grow. Naturally, this also results in more cash flow without the burden of associated debt.
Not only is funding immediate, but factoring is also an easy process – from the application to the account setup. It eliminates the rigid requirements that most SMEs face when seeking a bank loan. With less hoops to jump through, smaller companies can get the liquidity they need in order to focus on their core business and growth goals.
There are other challenges that come into play with traditional financing that can be difficult to pivot around. Bank services can provide funds that are limited or exhaustible, but funding from factoring can grow as a company’s invoices increase. Such scalable financing enables SMEs to commit to higher volumes, knowing that they will have enough cash on hand while paying for other expenses involved in running a business.
Due to its ability to improve visibility and control, factoring is in high demand during the current crisis.
It’s no secret that the backbone of economies are SMEs, and when equipped with powerful, alternative financing tools – they can at last flourish and grow unfettered.
Find out more on invoice finance and cash flow solutions here >>