Steve Everett, head of product and proposition for Lloyds Bank Global Transaction Banking

Businesses are bracing themselves for new demands on their available cashflow this month after a number of significant changes that affect the cost of doing business came into force.

The new National Living Wage will dramatically increase the cost of labour for many employers, while new immigration laws, which will prevent employees who earn less than £35,000 from staying in the UK for more than five years, could also lead to increased recruitment costs.

As well as affecting their own businesses, companies might find that any customers in the same boat could be compelled to delay the payment of invoices.

This is coming at a time where the pace of invoice settlements is already getting slower. According to the Asset Based Finance Association, small businesses now wait 72 days on average for an invoice to be paid, and our most recent Business in Britain survey found that UK SMEs are owed more than £500bn by customers. That’s an increase of 70% in two years.

But there’s little hope for respite among SMEs, because our very same survey found that a third of firms are expecting the problem of late or slow invoice payments to get worse.

So how can businesses protect and enhance their working capital? Invoice finance can provide the sure footing to get through the tough weeks ahead. It enables enterprises to unlock cashflow tied up in delayed payments by providing access to up to 90 per cent of the value of issued invoices, all within 24 hours. So if a business wants to continue growing, irrespective of late payments, this can be an ideal solution.

That’s not the only way to unlock working capital tied-up in SMEs. Our Business in Britain survey revealed that the average SME has more than £600,000 in physical assets, usually owning more than three quarters of those assets outright. Asset based finance can convert the value tied up in stock, plant, machinery or property into the cash needed to face new challenges and position a business for growth.

These forms of finance should form an indispensable part of a business’ toolkit, but despite recent figures from the Asset Based Finance Association which indicate that this form of finance is on the rise, many SMEs aren’t aware of these options.

Businesses are currently facing a number of new headwinds, all of which will affect their working capital. Looking at ways to unlock the value tied up in their assets will better place them to deal with these new pressures and ensure their aspirations for growth are not hampered.