Alternative Finance is Key in the Recession
Following news from the Insolvency Service showing a 51 % rise* in the number of firms going bankrupt in the last quarter of 2008, Bibby Financial Services, the UK’s leading independent invoice financier, is urging small and medium sized firms to consider all options before they face insolvency.
While the latest CBI Access to Finance survey (404K PDF) shows a marked decline in firms’ ability to access credit, alternative finance providers are actually increasing the amount they’re advancing to small and medium sized businesses.
Indeed, last year alternative finance providers advanced £18 billion** to struggling UK firms – £276 million of which was advanced by Bibby Financial Services, an organisation open for business when many traditional providers’ doors are closing.
However, research among finance professionals conducted by Bibby Financial Services*** at the end of 2008 showed 80 % believed poor cash flow was the biggest cause of business failure in 2008, and yet 73% rated small businesses’ understanding of the range of finance options available to them as average or below, meaning there could be many businesses failing before they’ve even considered all the funding options available to them
Ed Rimmer, chief executive, UK and Ireland, Bibby Financial Services said:
“Despite Government attempts to increase funding available to small and medium sized businesses, traditional bank lending remains tight, so business owners are seeking funding elsewhere, and discovering that many credible forms of finance exist beyond the high street names.
“Due to a lack of understanding invoice finance and other alternative funding solutions have often been off the radar for many small and medium sized businesses but now many business owners are beginning to realise the benefits of taking control of their cashflow before it’s too late.
“As demonstrated by our increasing funding levels at Bibby Financial Services with £340m to help UK owners and managers, our doors are wide-open to all small and medium sized businesses who are looking for independent alternative funding solutions, may have been rejected elsewhere, or simply those who would like more information about the finance options available to them.
“Unlike traditional banks, which can be inflexible and often take a ‘one size fits all’ approach, alternative funding providers typically take a much more in-depth view of a business and take into account the entire financial picture when making a funding decision. And so Bibby Financial Services, and other alternative funding providers, are very much still open for business when the banks may not be.”
For further reading be sure to look at the business advice article on Debt Factoring & Invoice Discounting.
* Insolvency Service, 6 February 2009
** ABFA statistics www.abfa.org.uk
*** Bibby Financial Services research took place in November 2008 among a national sample of 97 accountants and finance brokers.