The last few years have been difficult for many businesses both big and small and whilst some admittedly have done well, for most the pandemic hit hard and they’ve been struggling to recover ever since. However, there are signs this is starting to turn around and small businesses have been predicted to grow significantly in the next quarter of 2022.
Many small businesses have seen a sudden influx of orders coming through their doors and are now able to start to predict growth. This is great news for the economy as a whole. But the question is can they now afford to grow?
For businesses to take advantage of this growth, they need to have a stable and steady cash flow or be able to obtain additional finance.
Additional costs associated with business growth
As your business starts to grow, you will inevitably incur additional costs. These can include anything from hiring new staff members and purchasing additional stock to investing in new equipment. It is important to include these potential costs in your growth plans so that you can ensure you can afford them.
There are also, of course, just the additional running costs of expanding your business, for example, if you are a courier and have decided to increase your drivers and delivery areas, you need to factor in increased costs such as fuel and wear and tear. At the moment, as we know petrol and diesel prices are at an all-time high and if your business is dependent on a lot of travel this additional cost is going to have a significant impact on your bottom line.
What options are available to small businesses for additional finance?
Though relatively inflexible one option available to small businesses is to apply for a business loan. Business loans can provide small businesses with the funds they need to grow their business. However, business loans, especially from traditional lenders such as banks are becoming increasingly harder to get approved as the Treasury support schemes come to an end, with lending approval rates currently exceptionally low and interest rates steadily rising.
Another option available to small businesses is to apply for a grant. Grants are typically awarded by government agencies or private foundations. Grants can be used to fund a variety of business expenses, including the costs of expanding a business. However, grants can be difficult to obtain, time-consuming to apply for and may have strict eligibility requirements.
Small businesses can also consider using personal savings or investments to finance the growth of their business. However, this option carries significantly higher personal risks than other financing options and with the current climate, this may not be possible. Small businesses could also consider partnering with another business to finance the growth of their business. This option can provide businesses with access to additional resources and expertise. However, partners may have conflicting goals and objectives, which could lead to problems down the road.
A great finance solution available to small businesses is invoice finance. Invoice finance is a type of funding that allows small businesses to borrow money against their outstanding invoices. This can provide small businesses with the cash they need to grow their business. Invoice finance is a flexible financing option, providing an increasing funding line as you grow and can be tailored to meet the specific needs of your business.
How can invoice finance help my small business grow?
If you’re a small business owner who is predicted to see growth in the next quarter but is worried about how you’ll afford to finance that growth, invoice finance could be a great option for you, by unlocking the cash tied up in your unpaid invoices, it gives you the working capital you need to invest in your business and take advantage of new opportunities.
With invoice finance, you can borrow up to 85% of the value of your invoices, and the advance constantly revolves and is repaid as your customers settle their invoices whilst providing fresh funding on the new invoices raised. This means that you can use invoice finance to free up cash flow and grow your business without having to worry about meeting fixed monthly loan repayments.
What are the benefits of invoice finance?
Invoice finance is an alternative form of finance that allows your company to access cash sooner than waiting for payment from customers. It’s a facility that grows with you; a way to manage your cash flow, reducing the time pressures admin and stress of collecting payments yourself. It’s like having a hidden financial department and safety net. As you grow your business, it keeps pace with your needs and will help support growth.
Invoice finance can provide a number of benefits for small businesses, including:
- Improved cash flow: as mentioned above, invoice finance can provide you with the cash you need to invest in your business and take advantage of new opportunities. This can help to improve your overall cash flow situation and give you more financial flexibility.
- The advance is primarily secured on your debtor book, using a business asset to facilitate growth, not your private wealth.
- Application process and sanction for factoring with Partnership is quicker than the Bank – usually, a facility is agreed upon within 24 hours of receipt of information.
- Unpaid invoices turned into cash 24 hours after you raise them, not 30 or 60days later.
- A facility that grows as you do, no more having to constantly renegotiate further loans or overdrafts.
Entering into an invoice finance agreement with an accredited funder like Partnership Invoice Finance will not only give you the steady cash flow you need, but you will also have access to the expert advice they can provide in growing your business sustainably.
If you are looking to grow your business but have concerns about your cash flow and finances, contact us today and let us guide you and your business through its growth and expansion.