INVOICE financing specialist Bibby Financial Services is expanding into Aberdeen in a bid to win more business from small firms that have been denied funding by the big banks.
The company, which has focused on the Central Belt since entering the Scottish market in 1999, has appointed a business development manager for the north of Scotland, with the aim of adding more small businesses to its books.
Calum Williamson, managing director of Bibby Financial Services in Scotland, said: “Aberdeen has a buoyant economy and banks are still happy to fund the oil and gas industry, but some smaller suppliers may need an alternative like ourselves.”
Invoice financing allows firms to access up to 90 per cent of the value of their bills before they have been paid by customers.
The system has been criticised by some who feel it is more expensive than a bank overdraft, but Williamson said the benefits should outweigh the costs involved.
He said: “Traditional overdrafts have a set limit, but
invoice financing can grow in line with turnover. For growing businesses, it’s ideal as they get a percentage of the cash upfront when they complete a deal.”
The Federation of Small Businesses has said that four in ten of its Scottish members have been refused finance from their banks. In a bid to ease the flow of finance, the Bank of England and Treasury recently launched the Funding for Lending scheme, which
offers discounted funds to banks providing they pass on the money to cash-strapped firms and households in the form of cheaper loans.
Last week Sir Mervyn King, the Bank’s governor, said early feedback on the £80 billion scheme is positive, with some banks lowering their rates.
But Williamson said small businesses need to remember that other sources of finance exist. He said: “It’s important that firms don’t assume that banks are the only route to go down. If they can get the right funding partner it can ensure that funding is in place to help them grow when we get out of this recession.”
With the UK economy stuck in recession and the Bank of England predicting no growth this year, Williamson said Bibby has seen an upturn in interest about invoice financing.
He added: “We need the big corporations out there to show some good corporate citizenship and not increase their payment terms to, for example, 120 days, as that makes it really tough on SMEs, because they still have to pay their own monthly bills.”
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