Business finance insights

  Published: 3rd February 2017

Investment over the next 12 months

Investment by businesses over the next 12 months looks set to slow. According to recently released research over 27% of small and medium sized businesses are not planning to invest over the next 12 months.  At Zodeq we hope we can help businesses like these by offering flexible, finance solutions which mean that they can invest quickly and easily at times when their business will benefit.


Asset based lending is one financial solution which is proving popular at the moment.  The UK’s Asset Based Finance Association showed that asset based lending had significantly increased in the UK and Europe over the last two years with it reaching £1.31 trillion in Europe in 2015.


The UK claims 26% of this, which is an increase from 24% in 2014.  Asset based finance is one option which we can help with but we would also encourage small businesses to consider other options too such as invoice financing which can improve cash flow.


What attitudes are creating these trends?

A number of financial industry insiders are describing the behaviour of many SMEs as being in ‘survival mode’. This means they are particularly cautious about investing and when they are investing it is primarily out of personal finances or overdraft facilities as opposed to other options such as invoice financing, in spite of its potential benefits.


This attitude is not, as you might expect, from lack of awareness of other financing options but seems to be as a result of a wary atmosphere among businesses and their investors.


59% of businesses surveyed believe it will be more difficult to access funds in the future but 57% had not sought external finance in the past year either.


Of those firms, which have invested in their businesses, 34% used personal funds and 41% used traditional overdraft options.


These overly cautious attitudes might actually be having a negative impact on these businesses and the economy. Of those businesses that chose the personal funds route, 19% had to re-mortgage property, which could potentially have a significant impact on their personal finances. In many of these cases their businesses could have avoided using personal funds by using a cash flow solutions specialist like Zodeq.


Many SMEs feel vulnerable in the current financial climate with over half worried due to their dependence on individual clients. In fact, on average business owners stated that their biggest client was responsible for 26% of all revenue, which is a precarious position for the business as a whole if that client were to defect.


It isn’t just small to medium businesses who are behaving cautiously it is their investors as well. There has been significant evidence that investors are increasingly wary of start ups.   The financial solutions sector is adapting to fill this gap, and factoring and other financial solutions offer a practical alternative.


Has Brexit and the US election caused these trends?

There are a number of cumulative factors which have brought about the current atmosphere and predicted trends for the year ahead but industry experts have been quick to cite Brexit and the recent US election as major influences.


Brexit was recently blamed for the 20% drop in crowdfunded deals in the third quarter of this year and business owners are concerned that the fallout from Brexit will harm their access to finance.  This may be the case when it comes to investment and traditional business loans but not necessarily for alternative types of finance.


Businesses are also worried about trade options with the US following Trump’s win. Although it is early days Trump had spoken very firmly about protecting the American market and being tough on imports. This would mean that in addition to currency challenges exporting to America will become more difficult.


What can businesses do to access funds in this climate?

There are many options available to businesses, including asset-based lending. We have clearly seen from the recent data that asset-based lending is a highly trusted form of finance among businesses, particularly in the UK.


Zodeq offers reliable and trusted asset-based funding options to businesses in need of a cash injection, as well as other services to help business access funds and improve cash flow.


There are also alternative options such as invoice financing and invoice discounting. Invoice financing is actually one of the most reliable and secure options for accessing funds. It is also one of the fastest ways to tap into the funds that your business needs to expand.


Invoice financing means Zodeq can advance you the majority of the value of your invoices so you can get to work improving your business straight away rather than waiting for those invoices to be paid.


Whether you choose asset-based lending or invoice financing Zodeq can be your trusted provider.


Speak to us to today discuss your business finance options – 01244 617 087.