Boosting support for SMEs

Azets and international SME funder, Bibby Financial Services (BFS), recently partnered to provide ‘whole-turnover’ invoice finance funding facilities of up to £250k, enabling Azets’ network of specialists to access working capital and cash flow solutions to support clients. Derek Ryan, UK managing director at BFS, shares with Accountancy Today the current economic landscape for SMEs and what the £250k funding facilities are being used for.

Can you explain what whole turnover invoice facilities look like in practice?

Selective (sometimes known as single) invoice finance enables businesses to release funds against specific invoices, while whole turnover invoice finance facilities provide funding based on a business’s whole turnover – measured by all invoices raised.

Invoice financing provides ongoing cashflow support, enabling invoice financiers to fulfil existing orders as well as taking on new orders, or to provide a working capital injection enabling businesses to expand and grow. 

There are two types: Factoring and invoice discounting. With factoring, the invoice financier provides upfront funding against the value of the invoice, as well as handling credit control, enabling SMEs to focus on running their businesses. With invoice discounting, the funder advances an agreed level of funding against invoices, with the business continuing to handle their own credit control.  

What is the funding of £250k being used for?

SMEs use invoice financing for a range of different scenarios, including day-to-day cash flow and working capital in order to support hiring, purchasing new assets such as equipment and machinery, or business expansion. The way the funding is used will completely depend on the needs of individual businesses – it is a flexible form of funding that grows alongside a business’ order book. 

Why did BFS decide to partner with Azets in particular?

 BFS is proud to be a family-owned business, celebrating our 40th anniversary this year. We have a long-standing mission to help SMEs grow and thrive, and it’s hugely important to us that we partner with organisations that share our values, which Azets absolutely does. Our new partnership will help many UK SMEs wherever they are in their business lifecycle.

Why are SMEs the ‘lifeblood’ of the economy?

SMEs are undeniably a driving force of the UK economy, making up 99.9% of the UK business population, with a total average turnover of £2.3tn each year. There are 5.6 million SMEs in the UK, employing more than 16.3 million people. 

SMEs have shown their resilience through the entirety of the Covid-19 pandemic, with many of our clients growing despite the challenging circumstances. Amid ongoing turbulence, fostering the growth and success of SMEs is crucial to the UK’s economic recovery.

Are SMEs in a vulnerable position throughout the economy?

Although SMEs have shown enormous reliance, there’s no denying that many current factors are putting a lot of pressure on these businesses, and consequently threatening recovery. This includes soaring inflation, the rising cost of raw materials, and supply chain issues.

However, despite this volatile landscape, a significant proportion of SMEs will be looking to get back to business in full force in 2022. Our latest research of UK business owners shows that almost two-fifths said they are just about breaking even, and 26% said cashflow is a key concern, which is why our partnership with Azets is so important. It means that Azets’ clients can access both expert advice and expert funding, enabling them to grow and thrive.

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