Close Brothers Business Barometer asked over 900 UK SMEs their reasons behind selecting invoice finance or asset based lending as an alternative to bank loans and overdrafts. The results can be found below:

Before opting for invoice finance, a quarter of firms were interested in the product because they thought it may be cheaper than other options available. Meanwhile, another quarter wanted a fast way to access cash, and believed that this type of funding was a quick option.

The responses to the barometer indicate that company chairmen are motivated by cost of the product, with a third hoping it would be an affordable option. Meanwhile, over two thirds of financial directors/CFOs were driven by the speed of acquiring funding.

Of those companies currently using invoice finance, the majority of respondents found the product simple to use in practice, and cite this as their main reason for continuing to use it. Additionally, one in five firms believe it is the best way to access cash.

We also asked the reasons why SMEs would be looking to take out finance in the year ahead. 47% of company chairmen would like to invest in new equipment, while 48% of CEOs are looking to hire new staff. 

Products such as invoice discounting or factoring allow a flexible way to fund these investments, as the amount borrowed can grow along with business. Asset based lending is an additional option, where invoice finance is coupled with capital, released against other business assets such as stock, property, and plant and machinery. Asset based lending is ideal for larger businesses looking to raiser higher amounts.