In this new article, Nick Salmons, Sales Director (Yorkshire & North East) at PCF, explains why innovation and efficiency have become top priorities for SMEs — and how asset-based lending is helping them move forward…
Innovation is key
Over the last year, since joining Praetura Commercial Finance, I’ve particularly enjoyed the wide range of conversations I’ve been a part of, whether that’s with advisers, business owners or entrepreneurs. The overwhelming passion for SMEs to succeed has been inspiring, and those conversations have provided a real insight into the challenges many businesses are currently facing.
AI has never been far from the top of people’s agenda, particularly within the last year. While it continues to dominate headlines, the real priority for most SMEs is improving efficiency across the business. Whether that’s through AI, automation or technology, that makes production quicker and easier. Efficiency is a hot topic in every sector, and making meaningful improvements inevitably requires investment.
Many SMEs are now recognising that one of the quickest ways to boost productivity is by automating labour-intensive or slow processes, particularly as margins remain tight after the mounting challenges of recent years.
Across the market, businesses are taking decisive steps to make improvements even during challenging periods. At Praetura Commercial Finance, we recently supported a milling company to invest in a new production system, helping them streamline processes and enabling their team to focus on higher-value work, boosting overall output. In another deal, we worked with a candle manufacturer to fund the transition from manual wax-pouring to an automated process, increasing consistency and production capacity while allowing staff to concentrate on quality control and product development. Logistics companies are also implementing real-time stock systems and predictive tools that anticipate shortages before they occur, ensuring operations run smoothly and allowing teams to concentrate on business priorities.
In today’s rapidly evolving business landscape, innovation is no longer optional, it’s essential for survival and growth. Small and medium sized enterprises need to stay ahead of the curve in order to forge forwards and they need to be given the tools to invest in new technology, equipment or processes to be able to gain a competitive advantage in a tough economic environment.
Asset-based lending could provide the solution
Obtaining traditional lines of credit can be more difficult for SMEs, particularly during challenging economic times, when high street banks are noticeably being more restrictive with regards to their lending conditions.
Asset-based lending (ABL) however, focuses more on the value of a company’s assets, rather than a company’s creditworthiness or long-term profitability, so it offers a potentially more viable option for SMEs who have been affected by rising costs and other challenges. ABL provides businesses with the ability to access an immediate injection of working capital by leveraging their existing assets. This includes inventory, machinery, property and accounts receivable. As well as helping SMEs focus on trading activity and drive shareholder value, this access to liquidity can provide much needed headroom to invest in innovation.
Headroom to invest in research, development and automation
Innovation often requires significant investment in research and development (R&D). SMEs may need advanced equipment, technology including AI, or investing in people to create groundbreaking products or services. ABL enables this investment without draining a firm’s cash reserves.
Across the market, SMEs are using ABL to improve operations and provide the funds to allow them to increase consistency and output. ABL enables businesses to invest in efficiency and productivity that might otherwise be delayed.
Staying ahead of the curve
The market waits for no one. Whether it’s launching a new product, entering a new market, or scaling operations, SMEs often need to act quickly to seize opportunities. With the correct funding, they are able to be more agile and take calculated risks. ABL offers more flexibility than a traditional loan, with the borrowing limit directly tied to the value of the assets (such as invoices or stock levels). This allows businesses to adjust their financing needs as their asset base grows, providing a more adaptable solution to be able to capitalise on growth activities.
Innovation isn’t just about new products; it’s also about improving processes. This includes adopting cutting-edge software, streamlining workflows or automating manufacturing in addition to adopt AI – all of which lead to cost savings and a competitive advantage, but need capital to start making these changes.
Don’t let hesitancy halt advancement
Many business owners can be hesitant to take on debt, particularly in times of economic uncertainty. ABL funding however can be maximised to provide headroom and much needed liquidity. By structuring a financial facility that fits each individual business’ needs, it is a catalyst for transformation.
If you’re wanting to find out more about the different ways that asset-based lending could help your business, or if you’re a business finance adviser – your SME clients, you need to speak to a member of our expert sales team, whose contact details can be found here: praeturacf.com/team.
