When I first started with Creative Capital, I think a lot of perception around selective invoice finance was that it is a product to help companies in some kind of trouble. Used as a tool to pay HMRC or other key creditors who were becoming too vocal, it was often looked at with a short term, fire fighting attitude. The belief was that once the problem was solved, the facility wouldn’t be used again.
To be honest, I can’t really blame people for this. It was a reasonably new product on the market. Most brokers I spoke to didn’t offer it to clients as a solution, and most business owners had never heard of it. Like with most new products, Selective Invoice Finance needed to find it niche and to settle into the market place. This has been aided a great deal by the rise of more providers, and by the rapid rise of alternative lenders and FinTech. Business owners have become increasingly aware that there are alternatives available to them. Away from the standard loans, overdrafts and full factoring facilities, there are now more types of finance available than ever. Brokers, accountants and advisers have responded, and are now more aware of the different offerings than they ever have been. Selective Invoice Finance is very much part of the alternative lending landscape.
As a business, Creative Capital are talking to an increasing number of businesses who do not need fire fighters. We can still help these clients, but they are the exception. Most of the companies we talk to now are doing well, and are winning lucrative new contracts. Their everyday cash flow is strong, but these large contracts stretch them, and leave them vulnerable. Facilities such as ours allow their cash flow to flex with their requirements, and allow them to bid to for contracts which would previously have been out of their reach. When the contract is finished, our client stops using us, and begins again when another large contract is won.
We are also seeing a large increase in clients who sit somewhere in the middle. They don’t need their entire ledger funding, as with a traditional factoring facility. What they need to do is fund a proportion of their ledger during key parts of the month. This allows important payments to be met (HMRC, wages etc.), without the fee structure and tie in associated with other types of finance. Perhaps this is the biggest change in facility use we have seen.
So you see, we are not just here to solve those awful moments when you have run out of cash. Creative Capital work alongside our clients as a key part of their cash flow management, and have become an essential part of many SMEs finance structure. In fact, with more than 90% of our clients using us on a repeat basis, the evidence shows that the market has certainly shifted, and perceptions have changed.
Of course, we are still here to help those short term cash flow issues. Christmas is just around the corner (face up to it people!) and requirements will be there. Meeting early wage payments, managing extended credit periods during the festive period (which generally haven’t been offered) and a myriad of things all require attention. Get the solution in place now, otherwise it could be coal in the Christmas bonus this year.
Sales and Marketing Director
Creative Capital Limited
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Many thanks – the Creative Capital team”