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Bank helps to plug the cash flow gap

May 25, 2014

Martin Hannan

When RBS wanted to know how companies in the UK were dealing with the problems of cash flow, they asked the experts - the firms themselves.The results of a survey of more than 1,500 companies by RBS Invoice Finance (RBSIF) showed that many UK firms are struggling with late payment and cash flow management, with only 34 per cent being paid inside the 44-day payment limit which they had set - with 68 per cent seeking payment in that period, there remains a large gap between contracted payment terms and real payment time.Invoice Finance can help to plug that gap, and RBSIF is to the fore in offering flexible solutions. Having large sums of cash "tied up" in debtors can seriously limit a company's growth. Invoice Finance is an effective way of improving cash flow by converting invoices into cash on an on-going basis.Invoice discounting is suitable for businesses wishing to use their own credit control systems and processes. It provides them with quick access to working capital. With Invoice discounting, the firm retains full control of its sales ledger and client relationship.Factoring suits smaller and early stage businesses and frees up management time. In addition to providing immediate cash flow, factoring removes the burden of running a sales ledger and credit control functions."Cash flow management is a big drain on their resources," says Barbara Brown, Scotland Regional Managing Director for RBSIF. "They worry about having enough cash flow and take a lot of time each day away from their normal business to think about how they are managing their cash. These facilities provide flexible options which can improve cash flow and grow at the pace of the business. I regularly hear how the funding allows businesses to secure supplier discounts by paying them early. In short the facilities allow the businesses to focus on income generation, not administration."Brown's experience over many years tells her that SMEs like the benefits that Invoice Finance brings to them.She explains: "What I see is that businesses are introduced to Invoice Finance and it supports them through the different stages of their evolution.It helps them as they are trying to get off the ground, it helps them as they are growing and evolving into different markets, and it helps them through periods that are more difficult for them - it gives them a flexible and sustainable solution."One company which has used RBSIF to achieve further growth is Edinburgh-based Hutchinson Networks. Established in 2011, after achieving fast levels of growth including a 47 per cent increase in turnover last year, the IT network services provider has joined forces with RBSIF which is providing Hutchinson Networks with working capital support.Stephen Heslop, director of Hutchinson Networks, says: "We have a network of 33 staff across the UK and last year saw our first global expansion with the opening of an office in St Louis in the US."The facility that we have secured with RBSIF has had a significant impact on our ability to grow quickly. The working capital facility we have secured is flexible and grows in line with business and so is allowing us to expand more rapidly."Our main focus for 2014 is to expand even further and the partnership we have with RBS Invoice Finance will support us in achieving this objective."Paul Bradley, Business Development Manager at RBSIF, adds: "Hutchinson Networks is an exciting fast-growth business. It has experienced great success in a relatively short period of time and in a sector that has enormous scope for further growth."We are pleased that we have been able to provide the organisation with funding that will help to support its rapid growth and look forward to seeing its successes in the future."Barbara Brown concludes: "We have many such customers who are delighted with the way in which Invoice Finance has helped them and who are strong advocates for this excellent financial solution."See for more details

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Source: Scotland on Sunday

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