Healthy cash flow is a never ending issue for SMEs. Latest figures released in February 2015 by BACs payment scheme provided some shocking statistics. 

The survey indicated that more than three quarters of UK businesses are being forced to wait at least a month beyond their agreed contract terms before getting paid, with some 20% of directors, in companies that experience late payments, revealing that they have taken a cut in salary in order to keep cash inside their businesses.

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The importance of paying staff and bills obviously takes precedence over business owners’ own salary, which it must be agreed is encouraging to see, however directors of SMEs do have alternative options which would provide them with cash and prevent them from having to resort to these measures.

Some business owners are dubious of alternative finance options, favouring bank loans or even credit cards as an option to help with cash flow, but the truth is banks are turning away their small business accounts on a regular basis. Even if they weren’t, and banks did offer loans to SMEs to help with cash flow, the business is ultimately only increasing its debt, owing money to the bank as opposed to accessing its own money.

Related: Late payments set to push companies over the edge

What if you could get access to your own cash without having to wait, but not in the form of a loan and not something that might impair your balance sheet?  Virtually all companies have a strong asset in the form of accounts receivable. Goods have been sold or services rendered, invoices have been created, and the supplier of those goods or service is now waiting to be paid. On paper your business is growing but in reality the cash just isn’t there in order for you to actually grow.

Many entrepreneurs aren’t aware that their accounts receivable can be used to finance the growth of the company through spot factoring. This is a method by which the financing company buys single invoices or groups of invoices from your company at a small discount and then carries them through to maturity, putting instant cash into your business.

Unlike many other finance options, this is a process which can be turned around very quickly – sometimes in as little as 24 hours – there are no hidden fees and it’s also flexible allowing you to ‘use it as you need it’.  For example, as mentioned you can use this method for just one big invoice, on a one-off basis, or multiple invoices and an ongoing month-to-month arrangement – depending on your needs.

Spot factoring could be the answer to your cash flow problems, and prevent directors resorting to taking pay cuts in their hard-earned salaries.

David Banfield is the President of The Interface Financial Group, one of the world’s leading invoice financiers, with more than 40 years’ experience in invoice discounting and an extensive franchise base in nine countries. www.interfacefinancial.com