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Regardless of your political view, I am sure we have all been there: waiting for the government to act on their promises, hoping that the government recognises your struggle and trusting that maybe they just might do something to help you. As a small business owner, you are in luck! The government does recognise you and even labels you as the 99% of firms in this UK which are the “lifeblood” to our economy. The government wants your business to thrive.

But are they dealing with the most pressing issues facing businesses and are they doing enough?

Cash flow can be the biggest hero or the most evil villain in enabling the success of your small business. The government recognises that paying small businesses on time could boost the economy by £2.5 billion annually. They also acknowledge that improving the payment culture in the UK will support smaller business, especially the ones that the not have the time or resources to accommodate long or late payments from their customers. The research from the government review in 2022 stated that small and medium enterprises in the UK were owed an estimated £22,000 in late payments, a ghastly figure.

So what has the government proposed?

The government has said they will work hard to provide greater advice to small businesses on how they can negotiate payment terms that better suit them, and on how going digital can help them get paid quicker and manage their cash flow.

The government is also set to push through legislation aimed at expanding payment performance reporting obligations. This includes the introduction of new metrics, like a value metric, which will allow businesses and observers to gauge the significance of invoices, even those paid late, as well as a metric for disputed invoices. Furthermore, reporting on retention payments within the construction sector will be introduced.

And how does the government believe this will help you?

The government claims that your business will spend less time chasing payments and that your business will face more free time to focus on activities which help your business grow. They portray their plan as an opportunity to increase investment and productivity across the economy. They also emphasise that this helps a range of businesses, including those who do not have the resources to accommodate longer or later payments from their customers.

But how have some small businesses responded to this plan?

Charles Jarrold, CEO of the BPIF, said he was glad to see the government acknowledge the difficulties late payments can present small businesses, but was unsure of how useful the measures would be.

Others feel less optimistic, here are some of the general responses:

“This is nothing to get too excited about, it’s just more admin for us,”

“Individual business owners have their own methods, well developed over time, for ensuring that payments are made properly – and all the systems are in place, even before you go to small claims court. Traditionally, you’d put customers on stop, or negotiate payment in advance.”

“While we are encouraged that government recognise that this is a problem in the UK economy, and have taken some action, just strengthening reporting requirements isn’t likely to change the situation. We need to see changes in legislation to reduce payment terms, to address this once and for all.”

Whether these comments resonate with you or not, at Pinnacle Business Finance we have plans of our own to help you manage your cash flow.

Why should you choose us when the government has given advice?

We understand that many of you are new to business, we also acknowledge that many of you have been in business for a while and we also take into account that a lot of you have struggled with cash flow for years. We know that government advice may not be easy to implement as an individual business owner. What we do is personalised work, we offer a one to one consultation to really understand your business and more importantly, you! We want to know what you want from your business, how cash flow is affecting you and how we can help you in every aspect that we possibly can.

How do we address cash flow problems and how do our methods differ from the governments?

Our main solution to handle cash flow problems is through invoice finance! This is an effective method which we specialise in and which we have used to help a range of different businesses from different backgrounds.

Invoice financing swiftly converts unpaid invoices into cash for businesses. Instead of waiting for payments, businesses sell invoices to a finance company. The finance company advances a significant portion of the invoice amount upfront, retaining a fee. When customers pay, the remaining funds, minus the fee, are passed on to the business.

Invoice finance takes 2 forms: invoice factoring and invoice discounting. They differ in their methods but unite in their ability to relieve stress.

Invoice Discounting:

Here, businesses pledge unpaid invoices to a finance provider for a line of credit. Unlike factoring, businesses retain control over their accounts receivable and collections. It’s a confidential arrangement where businesses manage invoicing and collections while accessing funds based on outstanding invoices. Ideal for businesses with established credit control procedures who prefer direct customer relationships.

Invoice Factoring:

Here, businesses sell invoices to a finance company, known as a factor, at a discount. The factor collects payments from customers and advances a significant portion of the invoice value upfront, usually 80% to 90%, holding the remainder as a reserve. When customers pay, the factor releases the reserve amount to the business, minus a fee. Factoring offers businesses immediate cash flow relief without the hassle of managing collections.

We also offer a range of slightly more specific types of invoice finance depending on your business and have helped many businesses in this way.

Here is what a customer has to say about using us to implement invoice finance:

“He explained that he had seen many businesses like mine and selective invoice finance was far more cost-effective.”

We aim to help you and take the work load off of you, we are an experienced team of individuals who are available to help unlock the potential of your business!