Cashflow Forecast & Increasing Days Sales Outstanding
cashflow

The Covid-19 pandemic has affected economies worldwide. We sit on the edge of our seats not knowing what the future holds. All we can do is plan and prepare for the turbulent journey ahead.

In 2021, Businesses across the world are expecting an increase in the average number of days it takes to be paid by their customers, which will directly impact on their cashflow. A recent survey by Atradius states that up to a 10% increases in DSO have been reported across the UK and Western Europe compared to the same period in 2019. This increase is expected to continue into 2021. The expected increase in days sales outstanding can put an increased strain on a company’s ability to meet certain costs such as paying suppliers or paying staff. There are ways to minimise the detrimental effect that the increased time it takes customers to pay can have on a business. Invoice finance is a preferred option for many businesses across the UK and throughout the rest of the word to combat cashflow issues. With over 40,000 UK businesses utilising invoice finance to improve their cashflow position, the product has gained significant traction since its introduction to the UK in the 1960s. One of the reasons that invoice finance is favoured over alternative options such as a traditional overdraft facility is the fluidity and dynamic nature of the facility. Invoice finance provides financing against invoices issued to customers for goods or services sold; when a business sells goods to a customer and an invoice is raised, an invoice finance agreement will allow access to a percentage of the invoice value almost immediately, rather than having to wait for the customer to pay at an agreed upon future date. This versatile type of finance facility can provided businesses with a significant amount of cash when needed, whereas an overdraft may only be able to provide a static, smaller sum, which is often calculated using a business’s historic financial information.

If your business is currently exploring options to alleviate cashflow constraints, now may be the right time to consider invoice finance. Invoice finance is available in a variety of forms, including invoice discounting, factoring and selective invoice financing. FinCred CF is available to discuss the various forms of invoice finance and which may be most suitable to compliment your business so please get in touch by email (info@fincred.co.uk) or telephone 01732 749 757.

Post Date | December 18, 2020
Post Author | Guy Letheren