Optimum Finance is launching a dedicated credit management service in a bid to tackle the slow payment of invoices which plagues many thousands of UK small and medium businesses.
Separate to its core offer, the Bristol-headquartered invoice finance specialist firm which works with companies across the UK, has created the service for clients to reduce debtor days and improve cash flow.
Lack of available capital is the main reason for SMEs failing during their first three years and, as companies grow, take on larger contracts and look to expand their teams, access to cash is the single biggest factor in determining long-term success.
Credit management, also known as credit control, is time consuming and requires a specific set of skills in prompting the settlement of invoices which SMEs do not readily have access to in-house.
Small businesses often allocate the task to the office manager or bookkeeper. In some cases, it can also fall to the business owner, taking them away from focusing on business development.
Using an external team can facilitate better in-house relationships with clients by removing tension created when chasing payments alongside doing business with them.
Despite standard invoice payment terms being 30 days in the UK, the specialist lender regularly has new clients coming to them with an average of 90+ debtor days. The gap in payments means SMEs are having to meet their commitments on a monthly basis – rent, salaries and regular overheads – using other cash sources which puts pressure on the business.
Optimum Finance has long offered credit management as part of its full-service invoice finance provision, but this package will be available to businesses not necessarily looking for funding solutions.
Commenting on the new service Optimum Finance CEO Richard Pepler, says: “SMEs are more vulnerable to economic fluctuations in general and, with the current uncertain economic and political climate in the UK, outsourcing is an effective way of future proofing businesses against bumps in the road.
“We’re excited to launch our service-only credit management offering to support our SME clients with credit control. We’re acting as an extension of their team to effectively manage the business’ cash flow enabling them to focus on commercial growth.
“Many of our clients, such as Adan Limited, are already benefitting from this service and we’re expecting the numbers engaging this outsourced credit control function to continue increasing with our expert team relieving companies of tiresome hours of admin and allowing them to focus on growth.”
Adan Limited, a Lincolnshire-based hydraulic motor manufacturer established in 1968, started working with Optimum Finance in 2018, benefitting from the credit management service and debtor protection without borrowing from the lender.
Commenting on the relationship, Adan Limited director Steve Plaskitt said: “Optimum Finance is the only invoice finance company which has been able to provide a specially-tailored service and meet our specific needs. We don’t need a borrowing facility but the credit control and debtor protection provision has supported us hugely and allowed me to focus on running the business.
“The operation is seamless, and the team has been brilliant to work with.”