Demand for business finance set to rise in 2018

Small businesses are expected to demand growing access to alternative finance options in 2018, echoing a trend noted in 2017.

Data from Hitachi Capital Invoice Finance suggests that nearly half of all UK SMEs had to turn down a contract in the last year as they lacked the finance to deliver it.

Now new figures forecast a 21% increase in 2018, when compared to last year, with cash flow finance expected to be one major area of interest.

Based on 2017, firms are most likely to look for invoice finance options between May and August, with June a particularly popular month for enquiries.

It is also suggested that high levels of staff holiday and cut business hours result in late payments during these months, increasing demand for finance.

Most businesses needed cash flow support in May last year, with the businesses services sector accounting for 30% of enquiries for finance.

This highlights that firms are assessing their alternative finance options, possibly to aid growth or to provide a more stable foundation for the business.

The bank rate also rose for the first time since July 2007 in November last year, increasing to 0.5% from a historic low of 0.25%.

Businesses may therefore opt to use 2018 to assess their finance options to ensure they find the best deals to support their operations.

Those holding a financial interest in a business may also wish to request an individual business review to get a clear overview of the company's finances, assets and forecasts.

The key for businesses is to plan ahead and to act quickly at the first signs of financial distress, as this will increase the potential options available for refinancing, restructuring or recovering assets.

By Phil Smith


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