Business growth being hampered by lack of suitable finance?

author image Ultimate 07 December 2016

What are the fastest growing sectors of the British economy?  And if your business is growing rapidly how can we provide access to cashflow solutions and funding support that will allow your expansion to proceed apace?  At Ultimate Finance we offer everything from invoice finance to short term business loans and trade finance to asset finance, as well as specialist lending services for those in the recruitment and construction industries- so we have no shortage of options, plus ample funds!  In this article we look at two of our most popular solutions, invoice finance and asset finance.

Food for thought

Real Business magazine has just published its latest Hot 100 list of the fastest growing privately owned companies in the UK.  Using information from Companies House, in partnership with law firm Jordans, the Hot 100 is based on turnover and profit growth (in particular, the compound growth rates over a four-year period).

Although a wide variety of sectors are featured one in particular stood out – the food and drinks industry.  Over 10% of the businesses on the list were operating in this sector, more than any other by quite a healthy margin.

The top performer in this industry was North Yorkshire’s Cawingredients, ranked 25th overall with an impressive 27.25 per cent three-year compound growth rate (CAGR). They were closely followed by Dairy Partners (27th) with a CAGR of 26.56 per cent and high street food chain Itsu in 35th, with a CAGR of 22.24 per cent.  Others included Voicevale, Hyde’s Brewery, P.D. Hook Group, New England Seafood, Castell Howell Foods, St Austell’s Brewery and Border Biscuits.

Healthy growth in other areas too

The other sectors that have done particularly well are manufacturing, engineering and construction, each making up seven per cent of the list.  The CBI’s September Industrial Trends Survey of 481 firms reports that manufacturing companies anticipate that production will accelerate, and although exports weakened slightly they continue to maintain a level above the long term average.  The motor vehicle and transport sector reported the greatest improvement in the rate of production.    

How invoice finance supports expansion

If your business is going through a growth spurt you’ll probably need extra funding to hire more people, pay for more stock and raw materials or invest in new capital assets.

In the past the funding solution of choice for SMEs tended to be the overdraft.  Overdrafts, however, have recently been overtaken by invoice finance (see our recent article for full details).  Invoice finance enables you to release almost all the cash you have tied up in unpaid invoices and has several huge advantages when compared with an overdraft. 

For instance, an invoice finance facility grows with your business (the more invoices you issue the more cash is available) but an overdraft has a fixed upper limit.  Also, an overdraft can be withdrawn at short notice, whereas an invoice finance agreement will be for a fixed term, from a few months to a year or more.  Another plus is the fact that invoice finance gives you a source of business funding that’s independent of your bank – handy if you want to avoid carrying all your funding eggs in one basket. 

Why asset finance is preferable to outright purchase

If you want to invest in new vehicles, machinery, equipment or plant then asset finance is also a very smart way of increasing capacity without straining your cashflow.  A provider like Ultimate Asset Finance buys the machine on your behalf and you then have the use of it for an agreed period (usually five years).  This makes budgeting easy as the cost are spread across fixed monthly payments. 

The biggest benefit, however, is flexibility.  If you buy the asset outright, either from your own cash reserves or through some kind of loan or overdraft, it is yours for the entirety of its useful life.  If you want to upgrade to the very latest technology or switch to a newer model you have to sell your current machine – which is likely to be difficult and will probably involve a significant loss.

With Asset Finance you won’t find yourself lumbered with that problem.  At the end of the agreement you can extend the term, or you can purchase the asset for a nominal amount, or you can let the finance provider sell it and give you a proportion of the proceeds.  But that’s not all.  If you want to upgrade before the end of the agreement you just tell the finance provider you want to swap the asset for a newer and better model.  They’ll buy the new asset and switch it with the old one.  There will obviously be some fees involved in this but it’ll probably be easier, quicker and more cost effective than trying to sell the old machine and then buy a new one outright.


We’re here to help you

At Ultimate Finance we specialise in helping small and medium sized UK companies access the funds they need to grow.  Invoice finance and asset finance, as we’ve explained above, are very cost effective and flexible ways of achieving this.  However, we also have a number of other ways we can assist; short term business loans are available almost instantly through our online Ultimate Business Cash platform, we can help you fund large orders of goods from UK and foreign suppliers with Ultimate Trade Finance, and we have specialist cashflow solutions for recruitment agencies and subcontractors in the construction industry.  If you’d like further details of any of these options contact us now.

Get a quote today