News in brief: invoice financing, paperwork, card payments

News in brief
News in brief

Invoice financing increasingly popular among SMEs

SMEs in the UK and Ireland have borrowed £16 billion against unpaid invoices, according to the Asset Based Finance Association (ABFA). Firms have also borrowed £4 billion against property, stock, machinery and intellectual property. The £20 billion total in asset-backed lending is up 4% on this time last year.

In response to these new figures, Whittingham Riddell tax partner Duncan Montgomery has warned that alternative financing can result in issues if a business does not monitor the ageing of debt properly for invoice financing.

“If done well it can instil good credit control procedures and generate benefits for a business,” said Montgomery. “Where it can fall down is where collection of cash itself is outsourced to a third party through disclosed invoice discounting. Where a business relies on the personal touch to generate custom, email requests and threatening letters for payments one day overdue can crop up, and while they may stimulate payment, they are capable of losing customers gained through pleasant service. It is important to choose the right provider for this.”

Majority of SMEs believe red tape is holding them back

Around 78% of SME owners believe their businesses would perform better if they were freed from the chore of everyday admin, according to a survey by virtual PA company,

Key findings from the survey include: a third (32%) of survey respondents said that the cost of hiring a permanent PA was prohibitive; 27% said that they were deterred by the potential additional red tape – ie PAYE, contracts, holidays, sick pay; almost one quarter (22%) of company CEOs said that they only needed admin assistance on an ad-hoc basis, so a full time PA would be a waste of resources; finally, 19% of company managers said that they simply did not have the office space available to accommodate a personal assistant.

AVirtual founder and CEO Richard Walton said: “It is easy to think that doing everything yourself is the most cost-effective way to work, but you’re usually underselling yourself and if you’re able to offload the tasks that need to be done, but don’t necessarily need your personal attention, you find that you can get far more from your business.”

Financial advisers need to be educated about alternative finance

The alternative finance industry needs to do more to educate financial advisers about the services they offer.

According to a survey by Intelligent Partnership, despite the fact that 73% of the alternative finance providers surveyed stated that they were either already marketing to financial advisers, or planned to do so in the future, the vast majority of advisers were still unaware of key industry developments.

Only 7% of advisers surveyed realised that Alternative Finance is now regulated by the FCA and only 13% were aware that some platforms used contingency funds to protect investors from losses.

Intelligent Partnership MD Guy Tolhurst commented: "When we asked platforms what they thought the biggest barriers that prevent advisers from investing in the sector were, the vast majority said that it was a lack of education and awareness – so the alternative finance industry knows that they have to do much more to successfully reach out to the adviser community.”

SMEs could be losing sales if they do not offer card payments

Retailers could be missing out on crucial Christmas trading if they are not able to offer card payments, new research from EE reveals. Four in five (80%) shoppers in the UK expect to be able to pay for goods using their credit or debit cards, but a quarter (25%) have been forced to abandon transactions due to a lack of card facilities, equivalent to almost 13 million shoppers.

An additional challenge for many small retailers in particular is the increasing popularity of contactless payments. EE’s research reveals that more than a quarter (28%) of shoppers prefer to use contactless because it is easier and 29% prefer paying via contactless because it is speedy.

EE director of small businesses Mike Tomlinson said: “Christmas is one of the most important trading periods of the year for most small businessesand our research shows how vital it is to offer shoppers the ability to pay by card. EE’s Connected Retail and Pop-Up products help small businesses to quickly and easily offer customers the ability to securely pay by card over 4G, whether in a shop or a market stall, ensuring that they’re not missing out on sales at a crucial time.”