Following the economic downturn, one of the largest business groups to suffer were Small and Medium Enterprises (SMEs). A key component of these types of businesses is often their reliance on funding options and flexible payment terms in order to gain and keep a decent foothold in their area of business. Following the Irish economic crisis, many SMEs were unable to continue their operations due to a reduced availability of finance options. This lack of financing availability also meant that many start-ups were unable to get off the ground during this time.
Now that the Irish financial situation is apparently on the up, there has been an increased focus by funders and the government on entrepreneurship and SMEs. This is a fantastic starting point and is largely due to the fact that these types of businesses make up for over half of all Irish businesses, and have become somewhat of a backbone for Irish businesses. Recently, it has been reported that more funding options will soon be returning to the Irish market targeting SMEs in particular.
The welcome news recently for Irish SMEs is that one such form of financing which disappeared is set to make a comeback to the Irish market. Supplier Finance is now once again an available option in Ireland, offering financially secure Irish SMEs this method of paying key suppliers whilst accessing previously unavailable cash flow. Supplier Finance is said to be an ideal additional top-up for companies who have hit their banking limit as it will not interfere with any already existing funding plans.
Also known as supply chain finance optimises cash flow by allowing businesses to extend payment terms to suppliers whilst ensuring that suppliers are paid in full. This creates an optimal environment for both buyer and supplier. The additional benefit of this form of finance which lead to its popularity during boom times was that it allows the supplier access to additional cash flow that would otherwise be tied up elsewhere and minimises the risk of financial issues elsewhere in the payment chain.
Supplier finance is different to other finance options in that it is not a loan, but rather an extension of the accounts and is not considered to be a debt, suppliers receive full payment for their products. This makes supplier financing a very attractive option for a great many financially stable Irish SMEs.
Financially secure companies who have not been suitable for options such as Invoice Finance will be able to avail of this funding option which will be a welcome change for those in difficult to fund sectors.
Should you require any more information, advice or guidance on these or any other business or financial issues, please do not hesitate to contact us here at DCA Accountants where we will be happy to be of service.