Financial Struggle

An increasing amount of small and medium sized enterprises (SMEs) are Facing financial struggle due to delayed processes, missed invoice payments and a general neglect towards many new business services from the point of view of the consumer.

In fact, new figures revealing that SMEs in the UK are chasing a combined total of £150 billion in late payments is an indictment on the state of collaborative processes between SMEs and their customer base.

This really should not be the case. Homegrown SMEs are the lifeblood of the economy and what makes the UK such an exciting prospect for innovation in business across an abundance of industries. What’s more, the very existence of SMEs are vital to job creation and keeping the economy afloat, especially at a time of uncertainty regarding the politics of international trade opportunity, for example.

Unfortunately, late payments, invoice delays and a lack of communication are issues which have increasingly affected SMEs in recent years, forcing many businesses to utilise invoice factoring services on a regular basis. As a direct result of late payments, thousands of organisations fold or go into liquidation every year.

Simply urging businesses and consumers to pay invoices on time is not enough to resolve this issue in the long-term, and certain businesses need to take the issues into its own hands. The most effective resolution to these ongoing issues is to transform payments processes and improve the skills of the finance team. One route to this is utilising the support provided by a reputable private equity, which specialises in SME growth. Increasingly, as companies look towards the future, finding a partner firm that can aim to develop and grow the business, as opposed to those firms who provide ‘support’ via a short-term cash injection for the purpose of a quick sale is essential.

With the assistance of the right private equity firm, a smart cash injection can lead to rapidly improved infrastructure and general housekeeping processes. Depending on the context of the business which requires support, money can be used to directly improve invoice processes, such as with the introduction of fintech support, or by hiring in specialist personnel to deal with these issues.

Most importantly, however, with financial support a once struggling SME with limited profits (but a lot of potential) can be completely turned around and modernised, setting it up for a stable and profitable future. We also find that organisations that do open their doors to private equity investment work best when pre-existing personnel stay put, and additional staff brought in only when necessary.

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