Meet Martin. Martin owns an up and coming digital design agency with a very bright future indeed. Things have moved quickly for this young businessman, with a new office and new members of staff in just twelve months.
Although being a great example of young SME growth, Martin has had his fair share of challenges, and this early success hasn’t come without its difficulties. Speaking to Capalona, Martin explained how his company’s growth, while satisfying to see, has been limited through no fault of his own.
“We did so well in our first year, but we were nearly the victims of our own success”, explained the 35 year old entrepreneur. “The first and most prominent issue we faced was cash flow. Like most startups, our overheads were reasonably low and manageable in the early months. The income we were making was sufficient to keep us on track. Then the success started to snowball, and that’s when the growing pains set in”.
As is the case with many firms, growth brings with it more opportunities, but it sometimes comes with its costs. “As we started getting more customers on our books, our administration costs increased, and more staff were required to service them. Like many businesses, we invoice our customers who then have thirty days to settle. On a small scale this is manageable, but the faster we grew the harder it was to manage”.
“We were in a position where the capital was just around the corner, but we needed access to the funds earlier to keep the momentum going!”
We asked Martin how he countered this problem, and what he recommends to other firms in a similar situation.
“After much deliberation we decided to approach an invoice finance lender. We needed a way to unlock the cash tied up in outstanding invoices. If we see a new investment opportunity, or we have our own unexpected expenses, we need the funds available to act. Our invoice financier explained the process to us, and straightaway we knew it was a solution to our problem.”
“Without notifying my customers, they were able to lend us funds against our outstanding invoices, and within 24 hours we had the money in our account ready to use. Once the customer paid, we were returned the outstanding percentage minus the lender’s fee”.
“We now have an account with our invoice financier, and regularly borrow against large invoices to help us grow. We upload the invoice and they take it from there! If you’re at the start of your journey in business and are facing similar problems with cash flow, we would strongly recommend using the facilities of an invoice finance lender”.
It isn’t just Martin and his team benefiting from invoice financing, with many SMEs up and down the country quickly discovering this as a way of unlocking funds to assist growth. If, like Martin, you have the income but no control over when you access funds that are on their way, get in touch and see what SME invoice finance could do for your business.