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• 27 Dec

  Growth Finance For 2019

  2019 is just around that corner, and the run up to the New Year is always a good time to take stock of last year's performance, and make your plans for the next year. Growth is an expectation for almost half of UK SMEs.

  CHECK THE COST OF GROWTH FINANCE

  47% Of SMEs Expect To Grow

  The Q2 2018 SME Monitor from BDRC showed that 41% of businesses said they had grown over the last year, increasing with size from 39% of those with 0 employees, up to 64% of those with between 50 and 249 employees. Furthermore, there has been a consistent increase in the number of businesses experiencing growth of more than 20% per annum, since Q2 2016. Back then the monitor reported 9% of businesses achieving that level of growth, this has now risen to 14%, increasing year-on-year.

  Expectations for the future were also buoyant. The monitor showed that despite Brexit and economic concerns, 47% of SMEs are expecting further business growth over the next year.

  Increases in trading volumes can put cash flow pressures on SMEs. If you are manufacturing, raw materials and factory costs can start to cause cash flow headaches when you are watching the order levels rise sharply. In the services sector, such as temporary labour recruitment, the level of staff costs can cause similar issue, as you wait for customers to pay.

  Growth Finance

  There are options that will bridge that funding gap for growing companies. Receivables finance releases the cash tied up on your sales invoices immediately, so that you don't have to wait for customers to pay, constantly worrying about late payments. That cash allows an expanding business to reinvest that cash in stock, staff or raw materials, smoothing out the cash flow peaks and troughs.

  We have conducted research amongst existing users of receivables finance, and they confirmed that in 87% of cases they thought that using this type of growth finance had enabled their businesses to expand and grow.

  If you have plans to expand in 2019, there are sources of funding available that will grow in line with the turnover of your business. This does not work like a traditional overdraft, or loan, where the level of funding is fixed. Instead, the funding is based on the volume of invoices that you raise, so as you expand, so does the amount of funding at your disposal.

  By Glenn Blackman