Could invoice financing be the way forward for small businesses in Scotland to overcome the challenges of cashflow and ultimately prosper?

Andy Tait, CEO of Sallyport Commercial Finance, believes facilitating advances on business invoices not only helps bridge the financial gap between paying expenses and receiving payment from customers but can allow SMEs to thrive.

His company’s offering is targeted at small businesses with projected turnovers of around £200,000 or more, who trade with other businesses on credit terms. 

Tait gave Sir Tom Hunter and Lord Willie Haughey, hosts of the Go Radio Business Show, an example of a recruitment company that might pay wages on a weekly basis but has to wait days to be paid by customers.

“This is a typical example where you have temporary wages being paid out on a weekly basis but you’re having to wait 60 days, sometimes longer, to be paid by your customers,” he said.

“That’s a massive cashflow gap to try to fill. For your typical small business that doesn’t have lots of money behind it, it’s really challenging. So invoice finance can come along: the invoices are raised on a Monday and we can advance 80 to 85% against those invoices on the Tuesday.”

Lord Willie Haughey was keen to know: “I would imagine a lot of customers might not pass the test for you for the risk?”

Tait responded: “If I had my banking hat on from earlier days, I would totally agree with you because the banks generally are very risk averse about small companies. 

“The key thing for us, however, is the debt itself. So as long as the debt – the invoice – is collectible, that’s where our security sits. So we can take a risk, even on brand new companies.”