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7 signs your funding is failing your business

16/05/2023

Could your existing funding setup be holding your business back?

Given the range of pressures facing businesses currently, it’s vital that any funding facilities your business has in place meet both your short-term and long-term needs.

For example, are they providing the financial support the business requires to meet customer demand, pay suppliers on time, pay wages every month and meet your other ongoing bills and commitments? Are your funding partners supportive and responsive? Are you confident they offer the best value available?

In this article, we look at seven signs your current funding setup could be failing you and what you can do about it.

1. You’re unhappy

If you’re simply not happy with the facility, whether the level of funding that’s available or the overall service, it’s a telling sign that it could be doing more harm than good.

In this situation communication is key. Talk to your funder and discuss any issues that you have. The funder may be able to address the problem, and thereby improve your experience. If they seem uninterested in doing so, however, it may be time to seek an alternative.

Make a list of all the things you like and dislike about your current facility and use this to guide your research to see if there is a better option for you.

2. The cost outweighs the level of service

Consider how much your current facility costs your business to run and whether this is proportionate to the level of service provided and the opportunities it allows you to access.

Some funding facilities focus solely on improving cash flow, whereas others will incorporate additional facilities, so it’s important to remember that, when it comes to funding, the cheapest option isn’t necessarily the best.

First, consider if there is anything you can do to make your current option better value for your business. Will your funder structure your facility in a different way to reduce the cost? Can you access additional services to make the service better value for money?

Benchmarking different funding options will give you a good indication of what will work best for your business, but with numerous options available, it can be hard to identify the right one for your business.

This is where independent finance brokers add value. By understanding your business’s funding needs and challenges, brokers can introduce the most appropriate options in terms of funding level, service and cost so that your funding works for you and not against you.

Here are some of the key benefits of using a finance broker.

3. You spend lots of time managing your cash flow

With the right facility in place, managing your cash flow should be much more straightforward. So if you find that you spend a lot of your time on cash flow management, it’s likely that your current funding isn’t doing what it should be.

Take a look at your existing facility. Does the amount you can access provide the right headroom for your day-to-day activity? If it doesn’t, will your current funder allow you some flexibility to access more as and when you need it? If not, is there an alternative funding option that will allow you to access more cash to help your business reach its potential?

Whereas facilities such as loans provide a lump sum, other facilities such as invoice finance make more and more funding available as your business grows. By releasing up to 90% of the value of invoices within 24 hours, invoice finance bridges the gap between paying suppliers and receiving payment from your customers so that you don’t have to spend as much time worrying about your cash flow.


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4. Funding levels don’t support your plans

Especially in growing businesses, it can be frustrating when you become restricted by a lack of funds. If you’ve been finding it hard to capitalise on new business opportunities as they arise, your funding could be the problem.

One of the biggest issues growing businesses encounter with their funding is a lack of flexibility. If your current funding facility has little room for flexibility you could find that, when faced with increased demand, you have to turn down custom because you don’t have the resources to complete the order. Alternatively, a lack of available cash can limit your spending power when it comes to investing in new plant or machinery, for example.

In situations such as this you could try talking to your existing funder to see if there is anything they can do to help. If there isn’t, consider whether there are more suitable facilities available to your business.

5. Your business has changed since the facility began

Given the turbulent economic and political events of the past few years – not to mention the COVID pandemic – many businesses have changed beyond all recognition.

While some will have been able to seize opportunities as they have arisen and grown as a result, others have seen turnovers fall markedly and their customer and supplier profiles shift.

Either case could mean that your funding facility is no longer optimal for your business – but it could also mean that other facilities and products are now well suited to your requirements. So consider how your business has changed since you secured your facility and whether other lenders or products could provide better support.

6. The funder doesn’t understand your business and its needs

It’s important to recognise that a funding facility shouldn’t just be about how much you can access, but also whether the funder understands your business and its needs.

No two businesses are the same, so their funding facilities shouldn’t be either. Funders who take the time to get to know their clients’ business cycles and challenges are often able to advance additional funds to cover specific activities and events or find a way to work with you through a slower trading patch.

Is there a dedicated person who you can speak to whenever required who understands your business? Having someone at the end of the phone who knows you and your business will enable you to get the best service possible.

7. You haven’t researched your options in more than a year

Whilst this isn’t technically a sign that your funding is failing you, it could be a sign that you’re not doing all you can to ensure you’re getting the best deal for your business.

The market is constantly evolving and changing. So if you haven’t been keeping up to date with changes, you could be missing out on new products and services that offer your business better value and potential for success.

When you secured your current funding facilities, they may have been the best options for your business at the time, or they could have been a quick fix that you planned to reassess later. Whichever situation your business was in then, you should make time to regularly check your options. As your situation changes and the market develops, the options available to you could change drastically.

At Hilton-Baird Financial Solutions, we can help you to understand whether your funding facilities meet your business’s needs and expectations, as well as compare them against what’s available on the current market.

Should there be more suitable options available which cater for your current and longer term requirements, we’ll introduce you to the right lenders before working with you to compare and understand each one. We can then support you throughout the process and thereafter in the event you decide to proceed with a new facility.

As an independent and award-winning commercial finance broker, Hilton-Baird Financial Solutions has more than 25 years’ experience of introducing businesses to the most suitable funding facilities and lenders for their requirements. To compare your existing funding setup against the current market, please call 0800 9774833 or request a call back at a time that suits you.

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Some of the funders we work with

  • Optimum Finance
  • Close Brothers Invoice Finance
  • InvoCap
  • Lloyds Bank Commercial Finance
  • Barclays
  • Kriya
  • Berkeley Trade Finance Ltd
  • Regency Factors
  • Sonovate
  • Giant
  • Tradeplus24
  • Cynergy Business Finance
  • Pulse Cashflow Finance
  • Davenham Trade Finance
  • 4Syte
  • Time Finance
  • Haydock Finance Ltd
  • IGF Invoice Finance
  • Partnership Invoice Finance
  • Nationwide Finance
  • Team Factors
  • Investec
  • Ultimate Finance Group
  • Peak Cashflow
  • eCapital Commercial Finance
  • ABN AMRO Commercial Finance
  • Royal Bank of Scotland
  • Woodsford Tradebridge
  • Metro Bank SME Finance
  • Blazehill Capital
  • Castlebridge
  • Accelerated Payments
  • PNC Business Credit
  • Santander Corporate & Commercial
  • Leumi ABL
  • Clear Factor
  • Praetura Invoice Finance
  • Davenham Asset Finance
  • Skipton Business Finance
  • Roma Finance
  • MaxCap
  • Aldermore Invoice Finance
  • Merchant Money

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We are a credit broker and not a lender and offer credit facilities from a panel of lenders