By Steve Dinsmore, Corporate Finance Manager, Armstrong Watson

AS the economy slowly but surely starts to re-emerge from the Coronavirus enforced lockdown, businesses are beginning to switch their focus away from survival and towards re-opening and how to do this from both a practical and financial point of view.

The gradual winding down of support measures will leave businesses facing a new set of challenges, such as potentially operating on a reduced capacity with a full workforce, changing supplier or customer terms, and catching up on deferred liabilities, to name but a few!

Whilst the Coronavirus Business Interruption Loan Scheme and Bounce Back Loan Scheme introduced by the government have assisted businesses with much needed financial resources, many are now looking to the next round of fundraising to support opening up their businesses and assist with day-to-day cashflow requirements.

Working capital support can come in many forms, such as an overdraft, trade finance or invoice finance. The key to implementing an efficient working capital facility is to analyse and understand your working capital cycle (the amount of time taken to convert your stock into cash) and put facilities in place around this to address any cash shortfalls.

Typically businesses need support when looking to purchase stock or whilst awaiting payment from customers, or both.


An overdraft is an ideal facility to assist with this as these are inexpensive and not tied to direct transactions like trade or invoice finance. However, because of this exact reason, lenders prefer more structured facilities which are directly related to purchases or accelerate being paid by customers.

Trade Finance:

Trade finance facilities allow businesses to purchase goods without having to use their own cash, on terms which exceed those offered by your supplier. This allows businesses to retain cash in the business whilst still purchasing stock.

Invoice Finance:

Invoice finance allows businesses to access the majority of cash tied up in business to business invoices on the day that the invoice is raised, with the rest being accessed once the debtor pays.

These types of finance will likely become increasingly popular over the next 12 months as businesses exit lockdown and look to access much needed working capital support.

For help to identify your working capital cycle and/or talk through funding options, please get in touch with Corporate Finance Manager, Steve Dinsmore, on 07788 712078 or