cash flow

The impact of Late Payments on Cash Flow

The impact of Late Payments on Cash Flow 


 Covid-19 Loans 

During Covid-19 small businesses across the UK are striving to survive and keep cash flow positive. This can be particularly challenging when their customers are taking longer to pay and therefore stretching cash flow further. Employees are being furloughed to reduce overheads. Also, many SME’S are taking on board Government-backed loans such as the BBLS (bounce back loan scheme). The BBLS is for businesses that are looking to borrow between £2,000-£50,000 in as little as 24 hours. The government covering the first 12 months of interest payments. A business will be able to have access to the loan, up to 25% of their turnover as a lump sum payment. 

Pinnacle and your accountant can help you through the process of applying for a government-backed loan. The scheme is initially open until the 4th of November 2020 with 100% Government backing. The term of the loan can be up to 6 years keeping monthly repayment as low as possible, however increasing the overall interest payable.  

There are alternative business finance options available to UK businesses that will mitigate late payments and keep cash flow strong. The labour peer Lord Mendelsohn has introduced a Private Members Bill to the House of Lordsto tackle the issue of late payments for small businesses. This was proposed in January of 2020. Commonly with 30-day payment terms on an invoice if the customer exceeds this term, there is little to no fines incurred. This has repeatedly put a strain on cash flow for businesses. Especially in industries such as haulage, recruitment, and construction which rely on a positive cash flow position to pay staff, maintain vehicles, and buy materials.  


What Is the cost to SME businesses? 

 Pinnacle Business Finance is a member of the FSB (Federation of Small Businesses). A report was generated by the FSB back in 2016. This gave some headlines figures on the impact of late payments on the economy. A staggering 37% of small businesses reported having cash flow difficulties and resulting in 30% running into their overdraft. In addition to this, nearly 23% of all insolvencies in the UK were due to late payments. The estimated cost of this to the economy was 2.5 billion! 


What cash flow solutions are available? 

 One funding option available is invoice finance. There are 2 facilities which can be utilised to tackle cash flow using invoice finance. These are factoring and invoice discounting. These finance facilities are used to mitigate late payments and free up capital which is tied up in outstanding invoices. Furthermore, if a business has particular customers who are late at paying and require funding on these, then selective or spot factoring can be used. This is where the business picks and chooses what invoices or customers they want funding on.  


Credit Line facilities? 

 A credit line facility can also be used to tackle problems with cash flow and increase turnover levels. A credit line facility is a set amount of funding that a business can borrow and pay back over a flexible term. This operates like an overdraft and provides an SME or corporate venture the ability to access large amounts of funding as required.  

Food and drink

Food and Drink – The South West’s hidden secret?

Food and Drink – The South West’s hidden secret?

The food and drink industry has to be the secret weapon in the SME arsenal of the southwest.  At Pinnacle Business Finance, we must confess, we do rather much have a “sweet spot” for food and drink businesses. Putting the puns aside, SMEs in the food and drink industry has a rather unique ability to scale up very quickly. The Food and Drink Federation estimates some 30,000 people are employed in the southwest alone. We see a different statistic, we at Pinnacle Business Finance see the untapped potential of these businesses. Access to business finance from simple card terminals to supply chain finance can unlock growth. A trusted finance broker can be key in giving you the support your business needs.

Case Study: South East Vs South West

In 2017 the Food and Drink Federation report stated that the South East Food and drink industry was worth £1.9bn, slightly above the south west at £1.6bn. The staggering difference was that the south east exported £1.7bn, nearly 90% of its value. Needless to say, the benefits of exporting for any business are vast. The South West was a meager £0.8bn, 50%. We wanted to highlight this stark contrast in the hope to raise awareness among the food and drink community here in the south west.

It is no doubt that many businesses are caught off guard when it comes to their business finance. We often see highly skilled business owners so passionate about their product that they don’t get the right business finance in place. Of course, this is right, you wouldn’t ask a finance broker to bake your bread! Naturally at Pinnacle Business Finance, we understand this, and that is why we help find the business finance for you.

Supply Chain Finance can help businesses pay suppliers. Many businesses suffer from seasonality or large orders. This has a big impact on cash flow and suppliers need paying long before the payment arrives in. The gap between the payments is the cashflow conundrum. By accessing supply chain finance, businesses can access the finance on a pay as you go. It can cover the payment gap perfectly. Invoice Finance is a natural fit and can work seamlessly alongside.

Many small food and drink vendors have no idea about card terminals, much for the same reasons discussed earlier. Our article on card terminals provides further information on this. Card Terminals can boost turnover by as much as 300%, just by making it easier. The cost of a merchant card terminal vary, but at pinnacle business finance, we can support. As with any good finance broker, presenting you the options is key.

We pose this simple question, imagine if the south west food and drink industry accessed these innovative forms of business finance? It is clear there is considerable potential for southwest food and drink businesses in terms of export. A commercial finance broker versed in the industry could act as a trusted partner. It is clear access to business finance is a quick win and would support the ambitious South West SME.


What next for the high street?

You may recall that in April this year, Pinnacle Business Finance published an article about hope for the high street. Since that publication, there has been a barrage of news flooding the internet about the deteriorating condition on the high street. In August 2019, we tweeted an article from Business Money Magazine, whose headline was, ‘High street sales fell sharply … at their fastest rate since December 2008 … ‘. As a commercial finance broker based in Bristol, we visit dozens of businesses every week on our local high streets to listen to what they have to say. We are often left debating in the office; what’s next for the high street? This question led us to create this blog to show what support is out there, who can help, and what might be next.

A good commercial finance broker doesn’t just open doors; they can lead you through the right ones. On October 7th, The Daily Telegraph was one of a number of papers that covered the story around Pizza Express and its commercial finance dilemma. In short, it is becoming clear that Pizza Express is beginning the break under the weight of debt. From our Bristol office, we often see numerous businesses that are also struggling under the weight of excessive borrowing. It is important that small businesses, especially those on the high street, engage with a good commercial finance broker to help them with their options. It’s important to get the right type of finance for your business; accelerating growth, not at the cost of the future.

The commercial finance market offers many solutions for retail businesses, specifically situated on the high streets of Britain. One of our favorites is the Merchant Cash Advance.

Many of our retail businesses select a Merchant Cash Advance as a means of boosting cash flow as the repayment method means you pay back more when you are busier and less when you aren’t. This, coupled with ensuring your merchant provider is giving you the best rate on your merchant card terminal, is key. Every week, we help numerous businesses in the retail sector save money on their merchant card terminal. Ensuring a healthy balance between accessing cash and controlling costs will always prove a lucrative mix. Of course, conventional business loans and revolving facilities can also be a great solution for a high street business. These are just a few examples of what the commercial finance market can offer to the high street.

Innovation and adaptability are crucial to a business surviving. Naturally, this does not apply solely to the high streets of Bristol but to all high streets, industries, and countries. On the same day, The Telegraph reported woes for Pizza Express, and Burger & Lobster. They were writing about how they had refocused. We’re now looking at expansion again. They realised their initial expansion was too fast and made cutbacks, resulting in them being in a position to look towards the future again. In September 2019, the BBC reported that cash payments now represent just 20% of spending. Card payments the preferred method of payment. Here at our Bristol headquarters, we hear from at least one high street business a week that doesn’t take card payments. Therefore doesn’t have a merchant card terminal. If the BBC report holds true, high street businesses that don’t have a merchant card terminal could be missing out on 80% of business coming through their doors! This also means that they are limiting their financial options. For the business that doesn’t take card, merchant cash advance would not be available to them. Innovation will increase efficiency, lower costs, and allow retail businesses to access further capital if required.

From lowering costs via your merchant card terminal to accessing working capital via a merchant cash advance. Speaking to an expert commercial finance broker could be key to your business. Here at Bristol-based Pinnacle Business Finance, we pride ourselves on our expert knowledge. This is delivered through our team of astute commercial finance brokers. The high street might portray a mixed picture at present but, with the right support, any business can stand the best chance of success.

revolving credit facility

What is a revolving credit facility?

What Is a Revolving Credit Facility?

We have found that most businesses are unaware of what a revolving credit facility is or how it works. The British Business bank published a report in October last year that showed one-third of businesses were just unaware of the alternative business finance options. In short, a revolving credit facility works like an overdraft. It allows business access to working capital when they need it, often with no fees when they don’t. They get the comfort of a fixed-line of credit or amount they can borrow, without the burden of the full cost. At Pinnacle Business Finance, we see revolving credit facilities as perfect for businesses with working capital problems.


Accessing an overdraft is not easy for any business but it is often regarded as the default working capital facility. Since 2011 the forum of private businesses found that the number of businesses using an overdraft had fallen from 25 to 17% by 2015. With so few businesses using an overdraft, it is often surprising so many want one. We see the reason as flexibility, they like the freedom of accessing working capital finance when they need it –like a revolving credit facility. A revolving credit facility allows you access to a fixed amount of money with you paying a day rate for when you use it. Most are unsecured and can be agreed quickly giving you the speed and flexibility you need.

The team at Pinnacle Business Finance often speak with businesses who tell us they have an unsecured overdraft. After looking further, they often forget they have a charge on their property or indeed a debenture on the business. This additional security is often not required with a revolving credit facility. One business owner we spoke to couldn’t access personal finance due to the charge being registered on their property. After some investigation, it was linked to the business overdraft. We got them a revolving credit facility at the same rate but with no charge required. The business continued to access the working capital it needed and the owner of their finance.

Alternative Business Finance Options

Alternative Business Finance solutions such as a revolving credit facility are quickly becoming the mainstream option. Forbes reported that in 2017, Alternative Finance in the UK grew by one third in just a year, despite the double-digit growth every year since 2011. As mentioned in the article, less than 1 in 5 businesses use an overdraft. At Pinnacle Business Finance we don’t see anything alternative about a revolving credit facility. Businesses should be open to the fact they need access to finance and indeed working capital. We have some fantastic lenders who provide great overdraft style facilities.

Recruitment Finance

We recently spoke to a rapidly growing temporary recruitment business who was finding they were struggling with working capital. A growing amount of the work was private, so an invoice finance facility would only help with 60% of the business. We discussed a revolving credit facility and managed to get the facility agreed in under 48 hours. The business decided to wait for the bank, they wanted an overdraft, despite our lender’s facility operating in the same way. 3 months later the bank declined the overdraft and the business got back in touch. After a short discussion, they had turned away an estimated £50,000 a month’s worth of extra work due to a lack of working capital. It cost this business financially not to access the cash they needed when they needed it.