LFR on the Money: Seize the Improving Outlook

Hilton Baird

As key indicators show an upturn in the country’s economic prospects, businesses must be ready to take advantage. Evette Orams, Managing Director of Hilton-Baird Financial Solutions, discusses how printing companies could do just that with the aid of the most suitable funding facility.

"At long last, the steady flow of bad news stories about our economy is gradually being replaced by more positive trends and figures. Highlighted effectively in the most recent economic growth statistics, which suggest that the British economy expanded by 0.6 per cent between April and June this year, trading conditions are finally beginning to improve and wider business confidence is growing.

Although these only represent green shoots at this stage and much work needs to be done before we can proclaim a blossoming recovery is well underway, businesses of all shapes and sizes should be able to take heart and look on the bright side once more.

The printing industry, which has been vastly affected by the economic downturn, would appear to have already embraced this improving picture. This is demonstrated by new research, which has found that almost one in five of the UK’s printing and packaging companies believe the current state of the economic climate is benefiting their company. As new business has picked up, 61 per cent expect similar, stable orders over the next three months.

Mind the gap

The economic downturn has been characterised by businesses facing a vast array of cash flow related problems – many of which have stemmed from reduced demand for their goods and services. Even when orders have been received, getting paid for the relevant goods or services has then commonly been difficult, as businesses have had to seize every opportunity to preserve their own cash flows. Late payment has been a key feature, particularly amongst SMEs, with 17 per cent of those surveyed suggesting it’s their biggest worry at present. A further 16 per cent said bad debts were theirs.

While these concerns look set to continue for some time yet, businesses are urged to be vigilant about the widening cash flow gap between the provision of goods and services and getting paid. This will become more important once orders pick up, as paying suppliers whilst trading on credit terms will increasingly become more of a juggling act.

However, another interesting statistic from the survey is that more than 80 per cent of respondents said they had no plans to raise additional finance in the next 12 months, despite the benefits this can bring. This could arguably be, at least in part, due to the fact 16 per cent of the same sample were declined additional bank funding in the last six months, an unsurprising figure given the well-publicised declines in lending to small businesses of late.

Looking ahead

It is important to note that other avenues exist which deliver focused support that compares more favourably than traditional lending. Invoice finance, for instance, targets this cash flow gap by releasing up to 90 per cent of an invoice’s value within 24 hours of its issue, providing the means to fund day-to-day operations, bringing with it a peace of mind. Additionally, the boosted cash position can be utilised to take advantage of early settlement discounts with suppliers and focus on business strategy and growth. However the research also indicated that two out of three printing and packaging businesses had never heard of invoice finance, which encompasses the likes of factoring and invoice discounting.

Invoice finance has been well utilised by printing companies over the years as the industry is well suited to its facilities, which can also incorporate funding against other assets such as equipment, plant and machinery. Further, it remains widely available.

According to the latest official figures from the Asset Based Finance Association, the amount of funding that was advanced to its members’ clients during Q1 2013 increased by six per cent on an annual basis to £16.3 billion as client numbers rose by two per cent to more than 43,000.

This is evidently setting clients up for growth, as total clients’ sales increased by nine per cent over the same period. Arguably the biggest reason for this is that invoice finance grows in line with a business; the more invoices it raises, the more funding it can access, which is why more companies are ditching traditional funding products such as loans and overdrafts in favour of this solution.

So as economic conditions improve and cash flow pressures evolve, don’t just wonder which funding solution could help. Ask yourself this: What could my business achieve with the aid of the right facility?"

About Evette Orams: Evette Orams is Managing Director of Hilton-Baird Financial Solutions, which is part of the Hilton-Baird Group of companies. As an independent commercial finance broker, Hilton-Baird’s aim is to clearly identify their clients’ business requirements and introduce them to relevant providers.

Hilton-Baird Financial Solutions
was voted Asset Based Finance Broker of the Year 2009 & 2010 at the Business Moneyfacts Awards and UK Asset Based Finance Broker of the Year 2012 at the ACQ Global Awards, demonstrating its reputation and the trust its clients place in its service.  The business’ affiliations to the leading financial industrial bodies, the Asset Based Finance Association (ABFA), the Finance and Leasing Association (FLA) and the National Association of Commercial Finance Brokers (NACFB), ensures it maintains the highest level of standards for its clients.

Find out more about how invoice finance can help your business at www.hiltonbaird.co.uk/FS.

For more information, please contact:
Evette Orams
Managing Director, Hilton-Baird Financial Solutions
Tel: 0800 9774833
Email: This email address is being protected from spambots. You need JavaScript enabled to view it.