How invoice financing can help your business

Invoice finance could help your business cope with late payments, says David Prosser.

A hand dropping coins into another hand
Cash flow is getting tighter
(Image credit: © Getty Images)

Small businesses face a squeeze. Not only are more customers paying their invoices late as the economy slows and cash-flow pressures mount, but securing financing support from the banks is also becoming increasingly difficult. The Federation of Small Businesses (FSB) says 61% of smaller firms were hit by late payments during the first quarter of the year and that just 19% viewed the availability of credit as good – an all-time low.

Still, there may be a way to square the circle. Invoice finance products provide a means to borrow against the value of your outstanding invoices, unlocking funding for cash flow and growth. Invoice finance, which is available from a growing number of finance businesses and specialist intermediaries, is increasing in popularity; around a quarter of those businesses that applied for credit in the first quarter of the year were looking for some form of invoice finance solution, says the FSB.

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David Prosser
Business Columnist

David Prosser is a regular MoneyWeek columnist, writing on small business and entrepreneurship, as well as pensions and other forms of tax-efficient savings and investments. David has been a financial journalist for almost 30 years, specialising initially in personal finance, and then in broader business coverage. He has worked for national newspaper groups including The Financial Times, The Guardian and Observer, Express Newspapers and, most recently, The Independent, where he served for more than three years as business editor.