Bank of England Governor Mark Carney's recent decision to ease the lending rules for banks so that they can increase lending to households and businesses by up to £150 billion highlights the importance of easy access to finance for the UK economy.
Banks, of course, are not the only source of funding for businesses. Indeed, their inability and/or unwillingness to lend money after 2008/9 has made the UK a leader in online alternatives, such as peer-to-peer lending and crowd-funding.
To help businesses navigate the growing range of investment and funding choices available to them, including new online platforms, British Business Bank (BBB) and the Institute of Chartered Accountants in England and Wales (ICAEW) have produced an updated version of the Business Finance Guide they first published in 2014.
With contributions from 23 industry bodies, this publication, plus supporting online content, is a good starting point for businesses seeking advice on their options. As well as outlining the pros and cons of different types of funding, it explains what businesses must do to make themselves attractive to potential lenders/investors.
Top of the list is being able to demonstrate good cashflow management, including a thorough understanding of the amount of cash and working capital needed to run the business.
This process is made much simpler through e-invoicing – the electronic transfer of invoicing data between organisations, including links to payment systems. Not only does e-invoicing reduce day sales outstanding (DSO) and cut the cost of processing by 50-80%1, it also gives clear visibility of the amount of cash flowing in and out of an organisation for improved cashflow management.
New generation services like Neopost Netsend remove the cost and complexity of implementing e-invoicing, giving businesses of all sizes and at every stage of their development the opportunity to streamline processes and improve the efficiency of their accounts receivable and accounts payable functions.
1. E-Invoicing/E-Billing: Entering a New E