Simplicity, flexibility, transparency – finding the right finance for you

Many will agree that 2015 was the year that alternative finance truly went mainstream. New data from the Liberum AltFi Volume Index shows that firms secured £333m from online invoice finance last year, up 32 per cent on 2014, and lending to businesses from crowdfunding platforms reached £1.26bn – a 75 per cent increase on the previous year.

Clearly businesses are looking beyond traditional banks for finance, but alternative finance has not been without its challenges. In the past, SMEs have often had a tough time accessing funding from alternative finance methods. Wading through extensive paperwork, due diligence requirements from the benefactor, waiting on authorisation to receive funding and complicated pricing structures have given some finance programmes a bad name.

One particular alternative finance method with a long history is traditional invoice financing – where a third party agrees to buy your unpaid invoices for a fee. This often includes all the arduous requirements above. They tend to be restrictive, and factoring in particular can result in the finance company chasing the debt, leaving the supplier to lose control of their credit function. This, understandably, puts many SMEs off using this as an asset-based working capital solution.

There are certain industries that have been drawn to invoice finance in the past, such as recruitment and the manufacturing sector, which often feel the squeeze in cashflow from peaks and troughs in demand and seasonal fluctuations. But invoice financing has also come of age. Gone are the days when it was confined to specific sectors. Today, through developments in technology like Tungsten’s, it is available as a flexible and easy finance solution for any kind of business. From a construction company waiting for a payment on the latest stage of a contract to a software company billing for a licence fee, invoice finance has truly become democratised, and the decision to lend isn’t defined by your industry.

Tungsten serves 56% of the Fortune 500 and 67% of the FTSE 100 and we’ve been operating our electronic invoicing network for over 16 years. We work very closely with our customers across almost every sector – from technology companies to pharmaceutical firms, retail and financial services. We’ve been listening to their needs from the bottom of the supply chain to the top. Our customers needed quick and flexible finance to support cashflow, and where better to start than drawing down on services already delivered in the form of the invoice? In response, Tungsten developed a new, more agile, product called Tungsten Early Payment. It is very different to traditional working capital finance and here are a few reasons why:

Simplicity

Signing up is quick – all that’s required is a two-step registration that can be done online, on the Tungsten Network Portal. No long-winded underwriting process is required, meaning it’s simple to register, simple to use, and businesses get paid quicker.

Flexibility

It’s up to the supplier which invoices they want financed and when they are paid, and there are no requirements on how many times it’s used. It can be left sitting on the portal in the background until it’s needed.

Cost

There is no cost to switch Tungsten Early Payment on and no cost to keep it running. A small, transparent fee is paid only when it’s used, and it can sit on the portal without incurring any costs.

No chasing of debt

We don’t chase the debt from customers, in fact they don’t even know the invoices have been chosen for early payment. Tungsten puts businesses back in control of their cash flow and provides a simple solution to late payments.  

The alternative finance market is diversifying and at Tungsten we’re pleased to be part of a new wave of flexible funding options for businesses. Digital transformation is changing how businesses operate and opening up innovative new ways to secure finance. As 2016 gets into full swing, we expect even more firms to realise the benefits alternative finance can bring.