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08 Feb 2022 / Invoice Finance

2022: The rise and evolution of Invoice Finance to bolster business growth

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2022 is set to be a transformative year for businesses with innovation, recovery and prosperity at the forefront. We don’t expect the next 12 months to come without its challenges, but we anticipate that the continued rise and evolution of Invoice Finance will only serve to bolster business growth. Looking to the year ahead, Phil Chesham predicts what business owners will be looking out for over the next 12 months and how vital Invoice Finance will be in supporting this.

A new year means new opportunities

As the dust settles on 2021 and we start a new year, many businesses will see this as a chance to review, reset, and reinvest. New opportunities come in all shapes and sizes, whether that’s through innovating existing offerings, entering new markets, investing, or expanding. We know too well that with any new business venture comes strategic planning, cashflow forecasting and budgeting - because whilst grasping hold of new opportunities can result in winning new business, it can also mean increased costs. The benefit of Invoice Finance is not only its ability to release additional working capital to fuel those opportunities, but it naturally compliments growth with funding lines that increase as the business grows. Invoice Finance providers regularly review these funding lines to ensure that the facility provided is not only suitable for their client’s current circumstances but also their future ambitions too.

Invoice Finance – a favorable choice amidst rising interest rates

The news of an increase in interest rates in December was no doubt concerning for those who have relied on short-term bank funding to bolster their finances. With interest rates likely to rise again throughout 2022, what this creates for many is a situation where more is paid back in interest than the loan or funding line itself. Changes of this nature further amplify the importance of preparing cashflow forecasts and the need to build in headroom to cover eventualities such as the rise in the cost of borrowing. The good news is that there are plenty of affordable funding options out there, and Invoice Finance is one of them that typically charges lower rates of interest than the banks. So, with further interest rate increases looming, a greater emphasis on researching available funding options and how the costs compare will not doubt be at the forefront of business owners’ minds this year. Invoice Finance will undoubtably have an important role to pay here in providing additional headroom and peace of mind.

Zombie firms will cease to walk among us

Over the last 18 months, thousands of businesses have been helped by Government support initiatives. So much so that the Insolvency Service statistics for Q4 showed that the total number of company insolvencies dropped to their lowest annual level in 2020 since 1989. With the final raft of support measures nearing their end and repayments now due, so-called “zombie firms” who continue to walk among us but will inevitably fold, will no longer be propped up by this additional support. It will also be a challenging period for viable firms, and so recognising which businesses have a strong future ahead of them is key. Invoice Finance providers are in an ideal position to offer support and play an essential role in ensuring those viable businesses make it out the other side and thrive. Our relationship-driven approach means we take a step away from algorithms and really understand the story behind a business and can back their ability to make it a success.

Sustainable investments will take center stage in 2022

Our impact on the environment dominated the headlines following COP26 and the pressure is on British businesses to act now. Many are looking at more sustainable practices such as buying recycled resources and equipment, reducing travel or using more eco-friendly forms, switching up their supply chain to team up with more sustainable partners, and carbon-zero production targets. Our latest research with our own Invoice Finance clients confirms this, revealing that 4 in 5 business owners don’t have the systems in place to monitor their impact on the environment but 45% are planning to invest in these systems, and/or new operations, equipment or practices in the next 6 months to address this. Invoice Finance continues to be a top choice for business owners here by relieving the pressure on cashflow and providing the financial freedom to push their investment priorities further up the agenda.

Whatever 2022 brings, Invoice Finance providers will be on hand to support business owners to navigate new challenges or grasp hold of new opportunities.

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