The Intermediary – January 2026 - Flipbook - Page 53
SPECIALIST FINANCE
Opinion
Invoice finance
matters more
than ever
T
he news that Lloyds
Banking Group is
closing its invoice
factoring operation
marks another
important moment for
the UK’s small to medium enterprise
(SME) finance landscape. Although
banks continue to provide invoice
discounting, Lloyds is not alone.
Over recent years, NatWest Group
and Barclays have stepped back from
invoice factoring, while HSBC has
tightened its criteria.
Individually, these decisions
may make commercial sense for
large banking groups refining their
portfolios and focusing capital where
returns are most predictable.
Collectively, however, they raise
a more fundamental question: who
will provide reliable working capital
support to UK SMEs at a time when
cash flow pressure is increasing rather
than easing?
Structural solution
Invoice finance plays a pivotal role for
many businesses because it provides
cashflow management and effective
credit control, helping customers
manage debtor performance, reduce
risk, and maintain healthier working
capital cycles.
This integrated credit control
service is particularly valuable as it
ensures timely payments, mitigates
the risk of bad debts, and gives
operational insight that goes far
beyond simply releasing cash.
Many SMEs are profitable on
paper but constrained by cash flow in
practice. Long payment terms remain
common across the UK economy,
and businesses must oen pay wages,
suppliers, and VAT long before
invoices are seled.
Rising costs in recent years have
increased this pressure, particularly
for firms operating on tight margins
or experiencing growth.
Invoice finance addresses a
structural issue rather than a
temporary one. It allows businesses
to unlock cash already earned while
benefiting from professional credit
management, enabling them to
reinvest in people, stock, and growth.
Used effectively, invoice finance
is a proactive tool that supports both
operational stability and business
ambition.
Large banks step back
When major banks withdraw from
specialist products like invoice
factoring, the immediate effects can
appear limited.
Existing facilities are run down,
new applications are declined, and life
moves on.
The longer-term impact is
more significant. Choice reduces.
Competition narrows.
Businesses with seasonal trading
paerns, complex debtor books or
rapid growth plans find it harder to
access funding that reflects how they
actually operate.
As the Federation of Small
Businesses (FSB) has warned, many
SMEs are already operating under
sustained pressure.
Removing access to flexible working
capital does not eliminate risk; it
simply transfers it back onto business
owners’ personal finances or forces
them to slow growth, delay hiring or
turn away work.
Specialist providers
Large banks are built for scale,
standardisation and capital efficiency.
Invoice finance, by contrast,
is operationally intensive and
relationship driven.
GREG BELL
is chief executive at Skipton
Business Finance
It requires a deep understanding
of individual businesses, their
customers, their trading cycles and
their future plans.
Specialist providers are designed
around this reality. They invest in
credit expertise, client service teams
and systems that support day-to-day
trading rather than applying broad,
one-size-fits-all models. Decisions are
grounded in how businesses actually
operate, not just how they fit into
predefined templates.
Just as importantly, specialists tend
to commit for the long term. Invoice
finance is not a peripheral product; it
is their core purpose. That long-term
commitment brings stability, which
SMEs value just as highly as price.
Stability matters
Cost will always be part of the
funding conversation. But for SMEs,
certainty and continuity are oen
more important. A competitively
priced facility that is withdrawn or
reshaped mid-journey can be far more
damaging than one that is consistently
delivered over time.
The recent exits by large banks
highlight a familiar challenge. When
economic conditions shi or strategic
priorities change, non-core products
are oen the first to be reconsidered.
For businesses relying on invoice
finance to meet payroll or supplier
commitments, that uncertainty can be
disruptive and distracting.
Long-term providers take a different
view. They focus on supporting
businesses through growth, volatility
and change, recognising that
resilience is built over years, not
quarters.. ●
January 2026 | The Intermediary
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