Small firms urged to consider invoice finance

Businesses must take action and ensure they have the right financial solutions in place to help manage cash flow over the long-term, it has been claimed.

HSBC Commercial Banking is urging firms to chase monies owed after a new study indicated that the amount outstanding has risen by almost 40 per cent in the last year to £26 billion.

It has been suggested that small companies are being forced to wait up to six weeks after the agreed date to receive payment.

Noel Quinn, HSBC's head of commercial banking UK, says businesses must ensure they have the right financial tools in place and are seeking appropriate advice "to help them weather the storm".

He comments: "Ultimately a healthy cash flow is critical in a downturn and businesses do have the option, through invoice finance, of working with a financial partner to implement their payment collections on their behalf - allowing them to focus on the running of their business.

Mr Quinn says the bank understands the pressures faced by businesses in the current climate and is making up to £1 billion available to make the day-to-day running of such firms "more manageable".

Last week, the Forum of Private Business called for additional business support measures to be announced in the Budget 2009 this week.