How To Finance Business Growth – Part 5

You might need finance to grow your business – to expand the workforce, purchase essential equipment, or buy stock for new orders.

Use our blog series to understand your options for financing growth, and the advantages and disadvantages of each method.

Part 5: Overdrafts

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A business overdraft is an arranged current account facility for established businesses who need flexible borrowing for a short time.

Overdrafts can be used for working capital to cover unexpected costs or payment delays.

Borrowing occurs when payments out of an account exceed the available balance. An arrangement fee plus interest is charged, and security may be required.

Overdrafts are a common way of financing businesses with fluctuating finance requirements. They are provided for an agreed time period.


Advantages of business overdrafts

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  • Flexible borrowing & repayments
  • Keep ownership of busines
  • Suitable for short-term borrowing
  • Easy and quick to arrange, with immediate access to funds
  • Usually no charge for early repayment
  • Amount tailored to business cashflow needs
  • Suitable when it is difficult to assess funding amount needed
  • Interest paid only on overdrawn balance
  • Interest and fees normally tax deductible

Disadvantages of business overdrafts

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  • Pay interest
  • Tends to be for smaller sums
  • Arrangement fee plus legal fees
  • May need Security eg legal charge over property, personal guarantee
  • Must comply with conditions, such as covenants, monthly management accounts, projections
  • Repayable on demand, unlikely unless financial difficulties

For further information see

Continue reading “How To Finance Business Growth – Part 5”

How To Finance Business Growth – Part 4

You may need finance to grow your business – to take on staff, upgrade equipment, develop new products or run marketing campaigns.

Use our blog series to explore options for financing growth, and to understand the advantages and disadvantages of each method.

Part 4: Invoice Finance

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Invoice Finance is a way to unleash cash quickly, advanced against the collateral value of your unpaid invoices (accounts receivable).

Rather than wait 30 – 120 days for your customers to pay, you receive up to 90% of the money within 48 hours of raising the eligible invoice, and the rest when the customer pays, less fees and interest.

The Invoice Finance provider (Factor) decides which invoices they advance against, and up to what percentages.

For further information see


There are two types of Invoice Finance:

Invoice Factoring

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The financier buys the unpaid invoices and collects the debts from customers (more expensive).


Invoice Discounting

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The financier lends money against invoices, which remain owned by the business, who collect the debts (less expensive and confidential from customers).


Advantages of Invoice Finance

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  • Instant payment against sales invoices
  • Improved cashflow
  • Easier and quicker to obtain than business loans
  • Financier lends against strength of the invoices, not the credit score of business being financed
  • Typically more and cheaper funds than with a business overdraft
  • Free up time from credit control
  • Finance expands and contracts with a business’ sales ledger
  • Less expensive than equity investors
  • Professional debt collection can speed up customer payment times


Disadvantages of Invoice Finance

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  • More expensive than bank loans
  • May be 12 – 24 month tie-in
  • Could impact additional borrowing requests
  • Business may only be offered factoring not invoice discounting
  • Factors may collect all invoices
  • Credit insurance may be required
  • Third party invoice collection may affect customer relationships
  • Inflexible if financier pre-arranges number of invoices bought
  • Factors may limit concentration of invoices paid in some industries
  • Factors may take back their money or add fees if customers don’t pay

For further information see



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A company with powerful customers requiring long credit terms, or a business with high stock costs for good orders may find Invoice Finance useful.

Invoice finance companies usually fund business-to-business product suppliers. If you provide business-to-consumer ongoing services you are unlikely to be eligible.

New and established businesses can be eligible, but some financiers have a minimum trading time of 6 – 12 months.

If you export and invoices are paid by overseas clients, some companies will not assist or add conditions.

Some providers have specialist solutions for particular industries, such as recruitment, manufacturing, printing and transport.

For Invoice Finance providers see



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Invoice finance costs differ according to invoice value, business size, and perceived risk.

Fees vary – there is often a service charge, a discounting fee, interest, and additional fees for credit protection, or early contract termination.

For further information see



Both these methods allow businesses control of their cash flow, without the traditional obligations of discounting the entire debtor ledger and lengthy lock-in periods.

Invoice Trading (peer-to-peer lending)

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A newer version of invoice finance uses an online platform to sell invoices to individuals or groups.

You decide which invoices to sell, they are quickly verified and sold to multiple investors.

Because investors are global, invoices to overseas customers from export can be funded.


Spot Factoring 

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Also known as single invoice factoring or selective invoice discounting.

This allows businesses to sell one large invoice to fund cashflow.

It can be significantly more expensive than traditional factoring, and can take time to set up with a new Factor.

For further information see




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How To Finance Business Growth – Part 3

You may need finance to grow your business – to purchase vehicles, move to better premises, launch an innovative product or enter a new market.

Use our blog series to understand your funding options and the advantages and disadvantages of each method.

Part 3: Asset Finance

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Asset Finance is a well-established, flexible method of financing the purchase or rental of assets such as machinery and vehicles.

It is available to new and existing businesses with any legal structure, and is also known as Machinery Finance, Equipment Finance, Hire Purchase, Operating Lease, Finance Lease, Refinance or Contract Hire.

The amount financed can be from £1,000 – £10M for 1-7 years, depending on the usable life of the asset.

Usually an asset finance provider buys the equipment and the business leases or rents it, making regular payments for an agreed term. The financier insures and maintains the asset over its lifespan.

The amount needed, security type and business track record will influence the term, conditions, interest rate, fees, and which Asset Finance provider can assist.

It is usually important the business demonstrates it can afford the regular payments.


Advantages of Asset Finance

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  • Quickly raise funds to get equipment, if you cannot afford to buy outright or want to spread cost over its lifespan
  • Reduce upfront costs of large capital purchases, meaning cash available for other purposes
  • Release cash for growth opportunities whilst retaining use of the asset via Sale & Leaseback
  • Often no additional security required except the asset being financed
  • The interest rate is sometimes  better than that of a business loan
  • Avoids depreciation – many assets such as vehicles, IT equipment and industrial machinery lose value and their security worth rapidly
  • No unexpected costs as the asset finance provider is often responsible for asset maintenance
  • Additional credit line to avoid extending an overdraft or loan
  • Sometimes a fixed rate is agreed to assist budgeting, or a tailored package to suit the business
  • Certain equipment, machinery and vehicles obtained through asset financing qualify for capital allowances, giving some tax relief against profits


Disadvantages of Asset Finance

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  • Lack of ownership as the financier retains the asset, although may agree buyout at term end
  • Can be more expensive than buying the asset outright
  • A deposit is often required
  • Not short-term finance, it is structured over at least 12 months and may be hard to cancel
  • Maintenance costs covered might exclude Accidental damage, so the business may pay for repairs
  • Some assets obtained through Asset Finance are not deductable for tax relief on profits


Types of Asset Finance

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Hire Purchase

The business leases an asset from an asset finance provider, who purchases the asset and owns, insures and maintains it throughout the leasing period.

The business pays a sizeable deposit then makes regular payments to use the asset, and ownership transfers to the business at the end of the leasing period for a small fee.

VAT is claimed back in the usual way.

Flexible payment plans such as a final “balloon” payment enable businesses to maximise cashflow through reduced monthly payments. This final large payment is based on the residual asset value at the end of the leasing period.

Finance Lease

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The asset finance provider purchases an asset which the business leases over a fixed period, making regular payments to use the asset.

A lower deposit is required than for Hire Purchase.

VAT is charged with each rental, and is reclaimed as payments are made.

The asset finance provider sells the asset at the end of the leasing period, the business and provider may share the proceeds.


The business owns the asset during the leasing period, and is responsible for insurance and maintenance, but does not keep ownership after that, although sometimes this can be arranged for an annual rental fee.

Operating Lease

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The asset finance provider purchases an asset which the business leases over a fixed period, making regular payments to use the asset.

It is useful if a business does not need the asset for all its working life, just to service a contract.

The rental costs are reduced as they are calculated on the asset value over the lease period, not on the full asset value.

The business owns the asset during the leasing period, and is responsible for insurance and maintenance, but does not retain ownership after that.

Contract Hire (Vehicle Asset Finance)

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Exclusively for vehicle leasing, the asset finance provider will source, provide and maintain the vehicles and dispose of them at the end of the leasing period.

The provider can use its network and volume discounts to obtain better prices than the individual business could.


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The business sells assets to an asset finance provider who then leases them back to the business for regular payments plus interest.

Refinance enables businesses to quickly raise capital while still being able to use these assets.

It can be useful for cashflow and to allow businesses with adverse/no credit histories to raise funds, as the financier may use asset value not track record.

What Assets can be Financed?

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Physical assets with a high value can be financed if they are considered durable, identifiable, moveable and saleable.

Hard Assets include machinery, vehicles, manufacturing equipment and plant.

Hard Assets are reliable security for financers due to their ongoing value.

Some providers now offer finance on Soft Assets, that traditionally would not have been appropriate for asset finance.

Soft Assets are assets with little second-hand value at the end of the leasing period, such as software, office furniture, CCTV and EPOS systems.

Soft Assets are much riskier security, so asset finance providers need to know the business can afford repayments, and often require additional security such as a director’s guarantee or a cash deposit of up to 20% of the asset value.


For further information see


Consult an Adviser to check which Asset Finance option is best for your business situation and the tax implications.


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How To Develop Resilience in Business

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Business can seem a never-ending path of challenges and roadblocks. But you can decide how you frame setbacks, and your choice can help you succeed.

So how do you develop resilience and harness it for business growth?

Continue reading “How To Develop Resilience in Business”

Top 5 Tactics To Get Your Website Found – Tactic 5

We know putting fabulous fresh Content online is the secret to attracting new website visitors and helping Google rank you higher in its search results. But what do you need to know to maximise your visibility?

Tactic 5 – Workout Your Website

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A healthy website is essential to attract and retain the attention of search engines and visitors. Google is getting smarter at recognising context as well as content, and prioritises sites with expertise, authority and trustworthiness.

Backlinko explains that Google ranks search results by measuring how users interact with them.

A good User Experience (UX) where the article is relevant and authoritative so the user stays on Page (Dwell Time) will get rankings boosted.

A bad UX where the user ‘bounces’ back quickly to search results because the article is not useful or appropriate will get rankings lowered.

They add Google also takes account of organic Click Through Rate (CTR), which means that lots of people clicking on your search result should improve your rankings.

There are many factors affecting rankings, and not all of them hold the same weight. So what do you need to check to make sure your website is top of the pops?


1. Optimise For Mobile-First

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Google’s Mobile-First Index uses a website’s mobile version as the starting point to crawl, to reflect the ever growing number of searches from mobile devices.

Make sure your content is consistent across Desktop and Mobile, in case Google ignores content ‘hidden’ behind menus, tabs or buttons on mobile versions.

If you have the old mobile ‘ m’ version of your website, switch to a Responsive Design.

Deliver a great UX so people stay on your Mobile site. For example, avoid pop-ups that cover content and frustrate visitors.

Check how mobile friendly your site is with and the Mobile Usability report in Google Search Console

2. Speed Up Your Website

Continue reading “Top 5 Tactics To Get Your Website Found – Tactic 5”

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