Business on better terms: a funding alternative for small business - Business Works
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Business on better terms: a funding alternative for small business

by Lindsay Whitelaw, CEO, Urica Funding is the Achilles heel of the British economy and it's a structural flaw we've accepted too long, says Lindsay Whitelaw, CEO of Urica. That's why a group of experienced business men and women have founded Urica with me to fund British business on better terms.

If small and medium-sized businesses can't access finance they can't grow. It's a well-known dilemma, but as growth returns to the UK economy it's necessary we solve it.

Since the financial crisis, policymakers and researchers have struggled to come up with a solution. The debate has focused on debt and whether or not banks are lending enough, or if businesses want to borrow.

We carried out a survey of 350 small UK businesses and found that 3 in 4 want early payment of invoices and would take a small discount to get it. But half of them would never ask their customers.

The survey also found:

  • 75% of businesses expect to grow by more than 5% in the coming year.
  • 66% of businesses don’t think their bank would support a loan application.
  • 82% have suffered extended payment in the past three years.
  • 49% of businesses said they wouldn’t need to borrow if their largest customer paid early.

As a result, we have launched an early-payments platform without the need for debt or factoring. Companies invite their suppliers onto it and suppliers choose when they get paid. The supplier can get paid immediately, while the customer gets up to 75 days (or 90 days for an international client) to settle. So the midsize company still gets free credit, but the small company gets paid early. The supplier agrees a small discount on the invoice for this service, typically £85 to £250 on a £10,000 invoice. And that's it – a radical, but simple solution that also works internationally.

The system is simple to use - businesses connect and invoice electronically through the platform. When both parties agree the invoice, URICA pays the supplier early cash from the day after the invoice with no comebacks and no catches. And the customer settles with URICA up to 75 days after the invoice date. The result is a stronger supply chain for the customer and a stronger balance sheet for the supplier.

"I personally think it's brilliant," says Simon Manchipp, co-founder of SomeOne in London. "We are signing up to it to ensure all the photographers, illustrators, model makers, printers and creative suppliers we use are able to avoid cash-flow issues. Cash flow kills many small businesses. The creative industries often feel it the worst, generally being at the bottom of a supplier chain. If a big oil company wants a small design boutique to wait three months to get paid — then that little boutique needs to find a way to survive those three months."

"Without a healthy cash flow, the boutique might need to get into expensive debt with banks. It's not just money – to get that debt, the owners of the boutique probably need to risk losing their homes if things go wrong. It's serious stuff. This means that, even if your payment terms are over 60 days, you can get paid tomorrow. No debt. Just cash. No risk. No bad feelings. It's really simple. You can't quite believe it hasn't been thought of before."

Lord Digby Jones, former minister for trade and investment, is an ambassador for the business and says, "Midsize companies have a real part to play in helping fund Britain's growth and the way they can do that is by speeding up payments down the supply chain. But the challenge is these are conservative companies and they don't need to release cash to their suppliers. This is a way for them to help smaller businesses without paying for it with their own cash flow."

"Small business finance hasn't changed in 50 years and, given the innovation that's all around us in other industries, that just isn’t acceptable," says Lindsay. "I did this because it's something that needed to be done."

This way, small businesses can get paid immediately. No 90-day payment terms. That means small businesses are less reliant on banks and debt. They're more resilient and the entire supply chain is stronger, fuelling more opportunities for British exports and growth.

For more information and to find out more about how the system works, please visit:

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