Hitachi Capital has unveiled a new, no-frills Inspired Cashflow invoice finance product.
The company backed the service with a £500m funding initiative to boost small business finance.
The package was based on market research from 1,000 small businesses across the UK, which identified that 43% had cashflows concern and half were using bank-based finance. Government "funding for lending" schemes have yet to reach this sector.
The survey also confirmed accountants as the most trusted financial advisers, with an endorsement from 43% of businesses surveyed.
But general perception of invoice finance within accountancy is quite negative, but Hitachi Capital's head of commercial business John Atkinson said the research showed that 41% of businesses would consider invoice finance if they knew more about it; half of respondents had never heard of it before.
"It didn't seem to make sense to us that more businesses were crying out for funding and less were using invoice finance," he said.
"Indeed, our research has shown businesses will use anything but. When we asked them why, they replied they thought it was too complicated to get and to understand. The second reason was the lengthy [documentation] quite often 20-30 page contracts, and thirdly the hidden costs. Invoice finance is seen to be quite expensive," he added.
However, Hitachi claimed Inspired Cashflow was different.
The simplified product has no hidden costs, contracts are are short and concise and written in "plain, simple English",and there is a six-month trial period, so no lengthy contracts. There is one single fee, you can apply online through a secure live web application process and there are no set-up costs.
"Invoice finance is a viable alternative to the likes of overdrafts. It actually helps companies grow, but the issue is, not enough of them consider it," Atkinson said.
He added in a separate survey, around 80% of accountants found it to be a positive product.
He advised those who are sketchy about invoice finance or think it is a last resort finance option to speak to businesses who currently use it and examine costs in greater detail.
Atkinson offered a few practical tips about improving cashflow in addition to using alternate sources of finance:
- Don't be scared to reiterate your cashflow terms where you're owed money
- Contact debtors on a regular basis
- It may sound obvious, but finding the right person to speak to in an Accounts Payable team is a basic key to following up invoices and debts.
