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Cashflow challenge

When it comes to running a security company, it can sometimes feel like there is no end to expenses. From paying the bills and investing in new equipment (or repairing old) – maintaining a healthy cashflow can be tricky, writes Rob Mercer, Senior Regional Director at Ashley Finance.

The challenge is made even greater when considering a high proportion of staff wages are paid weekly, particularly during seasonal peaks when temporary staff may be required, meaning a constant demand for readily-available cash. At the other end of the scale is the responsibility of paying contractors and suppliers on time.

So what are the other issues security businesses are facing when it comes to keeping their cash flowing, and what are the solutions?

Late payments

One issue which has been discussed for years, but is unfortunately not going away, is late payments. With security businesses issuing invoices every day for their goods, products and services, a delay in payment can be costly. It’s a problem facing industries and businesses of all size – not least small businesses. According to BACS, almost half of the UK’s small to medium sized enterprises (SMEs) are being paid late, with the average late payment debt now standing at £32,185. This equates to £26.3 billion in total, which is a hefty burden to these businesses and the wider economy.

Late payments can be crippling, and prevent SMEs from not only running the day-to-day operations efficiently, but also stifles their growth. Businesses are under constant pressure to maintain their cashflow, so when there’s a delay in money coming in from clients, the delicate balance can tip all too quickly and cause real problems.

Seeking a helping hand

It’s a natural part of business life to sometimes require access to external funding, to allow for breathing space in the cashflow cycle. Invoice finance is a traditional, and still very popular product for businesses. According to the Asset Based Financial Association, the use of invoice finance by UK and Irish businesses has risen by more than £8 billion in the 10 years since the credit crunch of 2008. The reason invoice finance can be a great solution in industries such as security is because it’s flexible and simple to understand – which is what businesses want when it comes to external funding. Having an invoice finance facility in place can ease cash flow problems by allowing businesses to release the cash in unpaid invoices before clients or contractors are due to pay.

Money tied up in invoices can slow down the essential jobs of running a business; paying wages, rent and bills. And it can also prevent a business from moving forward, for example taking on new staff due to a big new contract, investing in new technology or equipment to offer your customers.

Steps to accessing finance

But the path to funding isn’t always easy. Our research with BDRC Continental found that 73% of SMEs find the application process to be overly ‘long and painful’. It’s essential that financial providers pay attention to every step of the customer journey and make it as seamless as possible and provide the support and consultancy needed; especially in more complex cases, such as businesses with a less than perfect credit score.

Regardless of a business’s financial past, when it comes to discussing money matters we know our customers value quality consultancy from experts – and good, old-fashioned personal relationships. At Ashley Finance, we pride ourselves on meeting our clients face to face or chatting over the phone. In today’s digital world, these kinds of conversations are sadly all too rare.

Managing finances is a serious and essential part of business life, and business owners don’t want to be treated like a number on a spreadsheet. We understand the pressures they are under, and do everything we can to be as flexible as possible to offer the most suitable solutions to meet their needs.

Funding

I know first-hand how having access to external funding can help a business run smoothly. We speak with security businesses on a daily basis, and know the challenges they face when it comes to solving cashflow problems. Our client, a professional security company based in Yorkshire but operating across the UK, needed help in managing their cashflow. The security industry can be tough, with small margins and high volumes. Our client needed funds to support expansion plans. They knew with invoice finance that if turnover doubled, the cash would be available. With the help of invoice finance the company has moved into bigger premises and the business continues to grow.

Keeping an open mind

Unpredictability is a fact of business life. For security companies in particular, a peak in business may mean they suddenly need to find the cash to buy a new van or take on more staff, for example. Ultimately, accessing external funding is nothing to be ashamed of. It can give businesses the cash injection they need to keep the wheels turning and maintain a healthy cashflow. And if this can be delivered from a provider who knows the business owner by name – even better.

Visit ashleyfinance.co.uk.


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