Unlocking Opportunities in the Payment Cycle; Martyn Freshwater, Regional Director of Lloyds TSB Commercial Finance, Examines the Uses and Benefits of Invoice Finance for West Midlands Firms during the Economic Recovery, and Highlights a Birminghambased Business in the Renewables Sector Which Is Realising Its Growth Ambitions through This Flexible Form of Funding

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Byline: Martyn Freshwater

Challenging economic conditions over recent years have put company payment trends firmly under the spotlight for business leaders, be they in relation to late supplier imbursement, employee remuneration or ways of retaining capital for reinvestment. As the regional and wider UK economies have continued their gradual recovery, businesses' keenness to maintain positive cashflow to ensure their stability, alongside suppliers' eagerness to be paid quickly to preserve their own liquidity, has led some companies to become more cautious in the terms they extend to partners.

However, against the same backdrop, a number of West Midlands-based companies of all sizes have maintained their propensity for growth.

By overcoming their working capital hurdles through the use of alternative forms of funding, such as factoring and invoice discounting - which advance the value of issued invoices to provide additional liquidity - firms are positioning themselves to take advantage of expansion opportunities emerging from the recovering economy. In doing so, they are turning their strong sales ledgers to their advantage and contributing positively to the improving trading climate in the region.

Adapting to businesses' growth requirements Invoice finance, which includes factoring and invoice discounting, is now considered a mainstream form of enterprise funding thanks to its highly adaptable and sustainable qualities in both shoring up cashflow and fuelling growth.

The flexible nature of these forms of finance means that they can be adjusted to match a business' performance, with the amount borrowed growing directly in line with sales. The more trading success a firm enjoys, the more funding can be released against the value of its issued invoices, which can subsequently be re-invested for growth.

For smaller firms, factoring offers an alternative which mandates the provider to perform a credit management function to chase unpaid bills, freeing up administrative time which can be spent improving operations, customer service or actively exploring expansion opportunities.

For those more established companies, which operate in-house credit control functions, invoice discounting allows them to release finance from issued invoices whilst still interacting directly with their debtors to secure payment.

Invoice finance is suitable for a variety of scenarios which require strong cashflow such as M&A activity, refinancing, turnarounds and - most prevalently - expansion capital, and it is this flexibility and adaptability which has seen it become a key player in the business funding landscape.

A collaborative approach to invoice finance The nature of invoice finance means that providers gain a deep understanding of a business' strategy and are able to quickly react to funding requirements on a short, medium and long-term basis. It is this partnership-led approach, such as that employed by Lloyds TSB Commercial Finance, which is bringing many brokers and advisors in the West Midlands to recommend their clients to consider invoice finance as their principal form of funding.

This emphasis on quality of service and delivery is more important than ever to both the businesses we fund and our introducers in the post recessionary environment.

Underlining our commitment to supporting companies and providing service excellence, our pioneering Introducer Charter for lawyers, accountants and brokers ensures that our contacts in the professional community can offer the best possible service to their customers.

It also pledges to provide a refund towards cashflow forecast costs, and keep our business introducers fully updated on the status of negotiations at all times. …