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Eleanor Beaumont-Smith

13 Sep 2018

Government announces new measure to boost funding for small businesses

Small businesses are under increased cashflow pressures. The UK is home to a growing number of start-ups that make up the entrepreneurial landscape and backbone of the British economy. 468,271 start-ups have already been created in the UK alone throughout 2018 so far (1), but why do so many fail?

At 42%, the obvious reason is that businesses fail because there is simply no market need for their product or service, in other words they are not solving any particular problem or satisfying a particular need. Surprisingly, however, the second most common reason that start-ups fail is because they run out of cash (29%), so even if they have a book full of orders they are unable to complete due to lack of funds (2).

A major contributor to cashflow instability is unpaid invoices, resulting in working capital becoming tied up and not accessible to invest in growth. Access to invoice financing has become essential for SMEs but they can face troubles obtaining such due to larger companies contractually blocking them from assigning their invoices to third parties.

New laws announced by Government this week to prevent larger businesses imposing restrictive contract terms on their smaller suppliers. These changes will give small businesses more access to the finance they need and maintain a level playing field between large and small organisations.

But what else needs to be done?

Financing for SMEs can often become expensive, including hidden costs and long-term contracts. This can have a negative effect as lenders use restrictive terms to maintain a hold over small business that are in need of funds. FinTech is changing the world of finance and helping to level the playing field between SMEs and large corporates. Through education, access of information and supporting legislation, SMEs are able to make empowered decisions about how and where they access funds.

Satago ensure that SMEs can access low-cost financing within 24 hours of application. The use of Satago’s technology allows companies to integrate with their accounting systems and automatically present invoices that are eligible for finance. Unlike traditional methods, SMEs won’t be tied into long-term contracts and hidden fees. All pricing is completely transparent, so businesses can accurately monitor and predict cashflows.

Satago also offers Free credit control tools, allowing businesses to easily chase unpaid invoices and free risk insight tools that help to minimise bad debt exposure. All the available tools are held on one centralised platform, removing the admin burden of manually managing a debtor book.

1 StartUp Britain, live tracker (accurate as of 13/09/18)
2. Forbes - Top 20 Reasons Why Startups Fail [Infographic]