A third of the accountants surveyed in the UK announced that in the last three years SMEs have had trouble growing their businesses due to cash flow issues. They also stated that these same businesses are turning towards alternative products such as exporting and invoice discounting. The SMEs are looking to grow their businesses with exporting because it seems the only way to gain business. Other countries have had trouble too, but there are still some eager to buy products which has helped to a degree. For all other problems like cash flow short term loans with a 90 per cent pay out on the invoices has been important.

It seems to be a bit of push and pull when it comes to the ability for a business to succeed. Some of the companies have been having trouble with environmental changes, as well as increased petrol costs. Over half of the clients with accountants have stated they need overseas opportunities to continue on rather than remaining stagnant in growth at home. At the same time 64 per cent of the businesses cited the weak pound as the reason they have gone overseas to gain more funds.

Invoice factoring provides help with cash flow that some companies cannot find by branching out overseas. Some companies are too small or just unable to provide products overseas. For these companies who are suffering from lack of sales, factoring has been a saving grace of sorts. Invoices that are unpaid means that money is not coming through like it should. Companies with small savings need a cash flow a lot quicker than others. Large corporations tend to hold onto money for 90 days where they make money off the interest. This delay can cause a small company to struggle.

Factoring pays the invoice up to 90 per cent. The company giving this financial aid takes a service fee and interest which is why it is not 100 per cent paid. The company then seeks to collect funds from the clients in order to get the money back for the loan they made. Discounting is different in that the ledger stays with the originating company, but the business still has cash flow to use in order to keep the company going. In this way clients are not made aware of the business’ struggles, but the business has the cash flow they need until payment is made.