Make no mistake; small businesses in the UK have continued to showcase robust performance ever since the result of the EU Referendum was announced last June.

There are signs that this trend could be about to change, however, with a recent Optimism Index suggesting that despite a sustained bounce-back the UK economy remains on the brink of a recession. This could hit small businesses hard, particularly those that are already struggling to optimise their levels of cash flow.

The question that remains is whether SMEs can improve their fortunes and optimise cash flow by leveraging specialist lending options?

Exploring Factoring and its Role in Your Business

Factoring is one of the most flexible and effective of these lending options, with firms such as Market Invoice offering products that can be tailored to individual business needs. This model ensures that businesses can optimise their cash flow at any given point in time while reducing their long-term debt and negating the need to sacrifice equity.

This essentially works by enabling firms to sell its accounts receivable to a third-party investor, at which point they receive the full value of the invoice. This negates the issues posed by 60 and in some instances 90-day payment terms, which can leave firms with minimal cash resources that prevent them from completing additional work.

This short-term debt is then repaid when the client settles their invoice, while businesses can look to do this sporadically and with high-value invoices or in a way that includes their complete ledger.

How This Can Boost Your Firms Cash Flow?

As you consider, factoring delivers a flexible and bespoke cash flow model that enables start-ups to thrive in a challenging economic climate. In the case of single invoices, for example, you can sell high value orders to investors in order to release considerable sums of capital into your business as soon as the work has been completed. This ultimately means that your business is never in a position where it needs to turn down ambitious or large-scale projects due to a lack of human or financial resources.

If you choose to access a funding line backed by your entire sales ledger (which creates an underlying cash flow system that underpins your business), you will create a model that optimises the amount of cash that is available at any given time. Aside from the obvious advantages that this delivers in terms of your available resources, it also means that you can increase your potential client base by taking on firms that insist on 60 or 90-day invoice periods and showcasing greater flexibility.

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