Invoice Factoring and New Business Start Ups

Can Invoice Factoring Help New Business Start Ups?

A recent comment by Brent Hoberman, the co-founder of the on-line business, about his concerns for small businesses, and start-ups especially, in light of the introduction of new tax penalties for small businesses. This article looks at those concerns in more detail, and suggests that Invoice Factoring is well worth considering for small businesses to help improve cash flow and the prospects for growth.

Small Businesses, New Start-Ups and Cash Flow

As a Business Finance Consultancy, we raise funds for all types of business – small and large – to help them prosper and grow. We also help new start businesses, especially with invoice factoring facilities. There are enough obstacles in the way of new start-ups already, so we completely agreed with Brent when he voiced his concern at a possible new demand from HMRC for small businesses to file quarterly rather than annual tax returns, and face escalating penalties for non-compliance.

His point was that new tax penalties such as these can take a ‘huge toll on an entrepreneur’ especially when considering starting a new business. They would likely be seen as bureaucratic and unnecessary demands by small and especially start-up businesses, which could easily make a start-up think again or simply not bother.

This is concerning because small businesses and start-ups are the life blood of the economy, employing far more people than the total of those companies who comprise the FTSE 100 or 250, for example. A lot of new start businesses rely on the business owners putting personal funds into the new venture who are unable to pay themselves much of a salary until the business is established.

We are concerned about these new HMRC rules and believe it shows just how out of touch the government is when it comes to the realities of getting a business off the ground.

How Can Invoice Factoring Help?

One of the biggest problems in the UK economy is the late payment of invoices. Indeed, research by the Federation of Small Businesses has shown that the UK’s late payment culture is most common amongst larger companies who make smaller companies wait for payment.

It is estimated that 30% of small businesses receive late payments, with an average delay of 30 days from the terms and conditions. When aggregated up, £26.8 billion is the total figure that is not paid on time to small businesses, with the average amount per business being nearly £32,000.

These are big numbers for any small business and can be damaging or even terminal for small start-ups. We can’t help with new Government legislation, but we can help when it comes to improving cash flow. This is where invoice factoring comes in. Put simply invoice factoring is always a good facility to have in pace, especially once a new business starts building orders up, because it saves them waiting up to 90 days to be paid once an invoice is issued. This improves cash flow, in turn, creating good conditions for further growth.

Contact us for help with Invoice Factoring

There are many different companies offering invoice factoring facilities. It is one of the fastest growing forms of finance around. However, this also means that there are lots of different deals on the market and it can be difficult to make sure you get the right one for your business.

What happens, for example, if the small print about ‘concentration limits’ (was that even explained to you?) means that you’re getting much less than the 90% of the value of your invoices up front than you thought?

That’s where we at Senate Money come in. As independent business finance consultants, we’re not tied to any particular provider. Our experience and knowledge of the market and what’s on offer allows us to find the best deal for your business. Click here to see some of our Invoice Factoring testimonials.

If you already have factoring in place, then call us on 01675 443878 or contact us for our FREE Invoice Factoring Facility Review. We could save you a lot of money.