The invoice finance and asset-based lending sector is providing an increasing share of finance to UK businesses according to latest data released by UK Finance, the trade body for the finance industry.

The amount of money raised via invoice finance (a method of unlocking cash tied up in invoices) and other asset-based finance such as leasing and HP, is up 13% year-on-year. The total amount outstanding sits at just over £22 billion, which is the highest advances figure ever.

There are just over 40,000 UK business now using this form of finance, although this number has remained relatively static.

With the government focused on driving up UK exports, the exporting picture is particularly strong, with sales from clients through export invoice discounting facilities up 33% year-to-date, and export factoring up 11%.

UK Finance wants to see the government do more to encourage smaller businesses access funding via these sources. They are calling on the government to bring forward long-awaited legislation to give more smaller firms access to much-needed funding.

Many small businesses find themselves trapped by o-called ‘ban on assignment’ clauses, which are sometimes imposed by larger businesses on their smaller suppliers. This can restrict the finance options available to those supplier businesses. To address this, the UK Government is expected to bring forward revised Business Contract Terms (Assignment of Receivables) Regulations in the New Year.

Regular feedback we have from Business Loan Services clients is how difficult it can sometimes be to arrange an overdraft limit. Iwoca, the short-term loan provider, recently undertook a mystery shopping expedition to see how challenging it can be! In this Bulletin we see how they got on and share 3 tips if you’re looking for an overdraft.

Staying with the subject of overdrafts, Lloyds Bank has announced a revision of its overdraft charging structure. We look at the changes and how it’s decision to simplify the cost of running an overdraft will make the charge more transparent and easier to understand.

To close, we look at the latest asset finance statistics from the Finance and Leasing Association. The most recent figures show usage of asset finance increased in October, but year-on-year, the growth is less than stellar suggesting that business owners are holding back on investment.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Stitcher or itunes channel.

Here is the Iwoca mystery shopping video demonstrating how difficult it can be in getting an overdraft facility.

If there is one thing that is going to hold back a business’ ability to grow its late payment.

Not being paid on time can be a barrier to growth and feedback I get from the Business Loan Services team is that this is a major bugbear amongst many of our clients.

But as the economy grows there are signs that payment settlement is showing signs of improvement.

A recent survey from Experian the credit reference agency showed that UK businesses paid their overdue bills on average one day faster between April 2014 and March 2015.

The national average of the number of days in which businesses pay beyond terms dropped by just under a whole day to 24.29 days

Perhaps not surprisingly, because they understand the pain late payment can cause, the smallest businesses were the quickest to tackle overdue invoices, as businesses with one or two employees settled bills 20.58 over agreed terms. This was an improvement of just over half a day.

Businesses with three to five employees showed the greatest improvement, paying bills 1.3 days faster at 21.34 days over agreed terms.

What about the UK’s largest business who typically have the finger pointed at them…. how have they performed?

Although those businesses, employing 501 people or more, took the longest to settle bills at 34.18 days over agreed terms in the year to March 2015, they did improved their payment performance by just under one day.

So well done to the big boys… but you still have work to do!

So if you do suffer from late payment what can you do?

Here are some tips from Experian:

Tip Number 1 – Check their status: Is the business you are dealing with real? Search them out on the web and see what you can find. Do they have a strong internet footprint?

Tip Number 2 Do a Credit Check: Carrying out a credit check will reveal their credit status, trading history and how they have paid in the past. All this will help you decide whether they are worthy of you giving them credit terms.

Tip Number 3 Remain Watchful: Nothing ever stays the same; the economy and individual businesses are constantly changing – a profitable business and a previously prompt payer can quickly turn into a business that is on its way down. The trick is to regularly run updated credit checks so you don’t get caught out.

Follow these tips and you will minimise the risk of being left with a long list of late payers.

In the latest Business Finance Bulletin episode Business Loan Services’ Rob Warlow looks at the latest statistics on bank lending to small businesses which show that banks are starting to provide more support.

Evidence of an increase in bank appetite to lend to small businesses is starting to show as Rob discusses news from HSBC of renewed focus it is giving to supporting UK small businesses.

You may not expect one of the Dragons Den panel to turn to crowdfunding to raise finance but that is exactly what Kelly Hoppen has done. Rob looks at a pitch Kelly has launched on crowdfunding platform Crowdcube.

In the Business Finance Tip of the Week Rob looks at the short term finance market in a chat with Max Woodman from Catalyst Finance and how they are helping businesses fill short term cashflow gaps.

If you prefer to listen to this episode of the Business Finance Bulletin you can listen below or download to your PC or phone.

You can also listen via our itunes channel here.

Poor cashflow is a constant headache for most business owners. In my conversations with business owners a common theme emerging is the day-to-day struggle of chasing outstanding payments and juggling creditors who themselves are pressing for payment.

Whilst you may be doing everything you can to encourage debtors to pay what do you do if your creditors are putting equal if not more pressure on you to pay up and your bank won’t help?

Here are four steps you can take.

Step 1: Assess Where You Are Now

If the pressure is on there is a high probability you have lost sight of the extent of your problem. When you are constantly bombarded with phone calls and letters it’s too easy to ignore the situation in the hope it will go away. But this is not the time to bury your head in the sand.

Part of the key to successful cashflow management is knowing exactly where you stand. Forewarned is forearmed.

So your first task is to write down precisely how much you owe and to whom. If your bookkeeping system is set up around stacking invoices in the corner of your office, or leaving them languishing in your email in-box, access them out and list them one by one with names, amounts and dates due.

Acknowledging and accepting the extent of the problem is an essential first step.

Step Two: Prioritise Your Payments

Having written a list of payments due the next step is to prioritise them. In prioritising the list you are aiming to classify them into three categories:

1. Business critical payments which have to be made under any circumstances. These are payments which would put your business at risk if not processed

2. Creditors who would be content with a part payment

3. Non-critical creditors who could wait and not cause you major disruption if not paid

Step Three: Communicate, Communicate, Communicate

In times of a cash-crunch it’s too easy to ignore the situation you’re in but in not communicating you will only compound the problem. Now you have your list the next step is to get in touch and inform each of them as to what is happening and to communicate your message or request.

Put yourself in your creditor’s shoes; what would you think if you were expecting payments by a certain date and had planned your cashflow position accordingly but no payment was received? Not impressed I guess. So why should it be any different if you are the one delaying payment?

By communicating your intentions you will be preserving and in some instances potentially strengthening relationships with your suppliers.

Step Four: Check Your Cash Position Daily

Now you know where you stand you can move ahead more confidently. From now on it’s all about monitoring the cash position in your bank account on a daily basis. You are checking to see who has paid you, what cheques have cleared and, referring to your payment schedule, which creditors you can pay as per the agreements you have made.

Once you have made a payment, follow step three and communicate … call to tell them their payment is on its way.

Continued communication is the key.

Follow these steps and you will be in a better position to handle any cashflow crisis you may be experiencing.