Recent news has shown that export activity is helping drive SME sector growth, with companies winning customers in emerging markets. However, at the same time, another report underlines how a limit on SME credit is restricting this expansion. Invoice finance has a key role to play.
According to figures from Western Union Business Solutions, UK SME exporters are increasing business with customers in Africa and India. The international trade monitor also reported an upturn in sales to South America. This is obviously welcome news for the UK SME sector, whose emerging market growth can be seen as a counter to challenging EU market conditions.
However, this growth is far from guaranteed, infers the British Chambers of Commerce, which has released a new report that has found that problems in accessing small business credit are hindering export expansion. Almost two thirds of companies interviewed for the report said that challenges surrounding SME finance were stopping them fully exploring export trade, while red tape was also cited as a major barrier.
So, what’s the answer to this SME finance problem? Alternative finance is certainly one. Products such as invoice discounting, factoring and asset finance have become a staple of small business finance strategies, and export finance is part of this group of financial facilities. Export finance is a simple way to help maintain cash flow by accessing capital in confirmed orders. Services such as direct funding and letters of credit can help fulfil orders and support overall business.
Export expansion is a great opportunity for UK SMEs to achieve the growth that the government has long wanted them to post and invoice finance looks set to play a central role in achieving this goal.
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