As the Greek tragedy enters its final act, Athens’ exit from the Euro is looking grimly inevitable.

The country that proudly calls itself the cradle of democracy has been badly let down by the democratic process.

This month’s inconclusive elections have left Greece in political limbo, and it could go bankrupt and crash out of the Euro as early as next month.

But as the bloody denouement begins, all we can know for sure is that the ripples of what happens in this proud nation on the edge of the Eurozone will be felt across Europe.

The Greek economy’s small size and distance from the UK mean that few British companies are directly exposed to a Greek collapse, but Britain’s banks are closely linked to the fortunes of the Eurozone through a network of loans.

Knock-on effect

The immediate impact of a Greek exit would be to make Greek banks go bust, but this would quickly cascade into bank defaults in other weak Eurozone countries like Spain and Portugal.

A Greek default will surely lead to international investors pulling their money out of the Eurozone, cutting a further swathe through the banks’ balance sheets – including those of British banks.

The cause will be different, but the effect could be the same as, or even worse than, the 2008 credit crunch.

For Britain’s struggling SME sector, the most immediate impact will be a sudden and potentially disastrous tightening of bank credit.

Despite the best efforts of Project Merlin, in many cases the banks are already unable or unwilling to lend, even to vibrant businesses.

Another credit crunch could force them to bring down the shutters on new lending, and even start clawing back existing lines of credit – for example by withdrawing overdraft facilities.

British companies that export to the Eurozone (of whom there are many as it’s the UK’s biggest international trading partner) will be doubly exposed as their European clients may suddenly start struggling to pay invoices.

This problem will be compounded by the likely fall in the value of the Euro – which will make British goods relatively more expensive.

The mere spectre of a Greek default sent the Euro to its lowest level against the Pound for three and a half years.

The net effect will be to put severe strain on the cashflow of many British businesses.

Round 2

Most worrying of all is the prospect of a second credit crunch. The last one in 2008, which began in the esoteric world of US sub-prime mortgages, soon spread to Britain and triggered the recession.

If the Eurozone crisis once again leaves banks unable to provide their traditional role as sources of finance, businesses will have to look elsewhere, to alternative finance providers like crowdfunding, private investors or invoice trading platforms.

Our experience shows that invoice trading is becoming particularly popular as a source of working capital.

Trading invoices online releases cash back into an SME’s business weeks or months before their customers eventually settle invoices.

By giving businesses earlier access to the money they’re owed, it improves cashflow and reduces a firm’s reliance on other sources of funding such as overdrafts, which are likely to become in ever shorter supply.

The banks are constrained by the pressures affecting the money markets – and if those markets seize up, so will their ability and appetite to lend.

As Britain braces itself for the fallout of a Greek default, Britain’s SMEs will need to prepare for the worst – and explore alternatives to the banks as sources of funding.

With the banks at risk of being sucked into a vortex of Eurozone chaos, alternative sources of finance will be thrust to the fore – and could play a vital role in helping SMEs cover their overheads, pay their bills and deliver the growth that will be UK Plc’s best defence against the gathering storm across the Channel.

As reported by growthbusiness.co.uk

Missing payments for as little as a day incurs fees as well as interest. If your circumstances have taken a turn for the worst and you are unable to pay anything, then your debt gets passed on to credit collectors, and of course this incurs more cost. In some cases, this could double the original sum borrowed: and this is bad news for SMEs.

According to Wonga, loans of £3,000 to £10,000 will be available for terms of between one and 52 weeks. The cost, including a variable application fee and interest rate, starts at 0.3% a week, and the loans must be repaid in weekly instalments.

CEO of Platform Black, Christopher Shaw’s press comment on The Economy News UK, My Finance UK, Small Business UK, and B2 Business Hub  shows that there is a desperate need for Government to take action and find work with alternative finance providers to solve the funding gap woes facing SMEs.  Woes that could push SMEs into taking out payday loans of their own.

As Chris said;“The facility being offered by Wonga is not a sustainable way of financing a company and though the UK’s SMEs need fuel to restart the economy, there are more cost effective ways to achieve it.”

CEO of Platform Black, Christopher Shaw’s recent press mention on SME WEB’s article  ”New report confirms the credit crunch has been tougher for SMEs than for large companies“  highlights the plight of Small and Medium sized businesses in securing instant finance in the UK. Despite various attempts by government to encourage lending to SMEs, small business owners still face hurdles to get access to much needed cash flow.

Tim Breedon, at the recent  ICAEW “Boosting Finance options for Business” event held in March, 2012 had a number of recommendations  for government for increasing the availability of instant finance to businesses. Recommendation 8 was for government to encourage and participate in the development of online trade receivables exchanges, where companies bid for invoices via platforms such as Platform Black in order to allow greater access to receivables finance.

Tim Breedon’s task force point out that though the scale of use of invoice trading platforms is small, it is however, “experiencing exponential growth”. The task-force welcomed the market-led development of these exchanges and considers that Govt could support and accelerate their growth through co-investment by the Business Finance Partnership.

It seems as though businesses do really need to look to alternative forms of finance such as invoice finance for their business finance solutions. Platform Black invoice trading  offers a solution to this instant finance need as the funding gap continues to increase.

As a means of bridging the finance gaps that accompany running and growing a business, Platform Black’s online invoice trading service is an easy to use business solution delivering instant finance. Whole sales ledger factoring or invoice discounting doesn’t work for all companies. Some companies just need a flexible facility that allows them to finance single invoices, bundles of invoices, or a part of their ledger during cash flow pinch points in their business cycle or when they want to reduce their level of overdraft. Platform Black provides exactly this flexibility.

One of the major advantages that Platform Black Invoice Trading delivers for SMEs is that it puts the business owner back in control of their finances – businesses can turn to Platform Black invoice trading for all their instant finance needs, whenever they need to ease cash flow issues. Platform Black means that SMEs can release funds from unpaid invoices without having to worry about high interest rates or possible rejection from bank lenders.

More than three years on from the depths of the recession, many strong and viable businesses are still struggling to cover their overheads as a result of their customers taking longer than ever to pay — or due to withdrawal or reduction in their overdraft facilities. Platform Black’s invoice trading auction solves this problem once and for all.

Invoice trading sounds technical, but it’s not. SMEs (the ‘Sellers’) simply take their invoices along to an online auction and sell them individually or in bundles to the best bidder (the ‘Buyer’). Current Buyers include a wide range of institutional investors, high street banks, asset-based lenders and high net worth individuals.

The sheer diversity of Buyers, with their varied appetite for different sectors and invoice sizes, has created a highly liquid market that offers a genuine alternative for SMEs to traditional sources of finance, such as banks and asset-based lenders.

Crucially, the Seller can select the period of time before it buys the invoice back from the winning Buyer (the repurchase date), which is 30, 60 or 90 days. There is no minimum or maximum auction size.

When they win a bid, Buyers are effectively advancing the money to the Seller, minus their own ‘Discount Fee’, which varies from invoice to invoice depending on the amount the Seller has asked for and the competitiveness of the auction (the more competitive the auction, the lower the Discount Fee). When the Debtor company eventually pays the invoice, the Seller buys it back from the Buyer, effectively ‘realising’ the Discount Fee for the Buyer.

Unlike traditional Invoice Finance, there are no arrangement, annual or exit fees, and no fees for not using the facility — just the fee for borrowing the funds (the Discount Fee), a small one-off lifetime membership fee and Platform Black’s own fee of 0.5% per auction for all auctions above £30k, or a flat fee of £150 for all auctions below £30k.

Platform Black is unique among invoice trading companies in that it has integrated Experian credit scores into its system, enabling would-be Buyers of invoices to rapidly assess both a Seller and Debtor’s risk profile.

It is also unique in that the Asset Based Finance Association (ABFA), the body that represents the invoice finance industry, has been consulted since the earliest stages of development. In addition to being ABFA Affiliate members, Platform Black is also part of the National Fraud Authority’s Action Fraud initiative.

Until now, the majority of these services (known as invoice discounting and factoring) have been provided under long-term, exclusive agreements with a single bank or specialist finance provider. However, these agreements prevent companies from shopping around and often charge them to keep the funding facility open, even if they are not currently using it.

Research by Platform Black shows that many businesses want a more flexible ‘finance as a service’ with access to a number of providers that does not tie them in and puts them back in control of their finances. Therefore, once Sellers register with Platform Black and satisfy credit checks, they are able to sell as many or as few invoices as they want – for an asking price they believe is fair. And the cost stays competitive because Buyers must bid against each other for the invoices on offer.

Christopher Shaw, CEO, Platform Black, commented:

“In a climate where banks are still either reluctant or unable to lend to SMEs, invoice trading is an increasingly popular source of working capital. It releases cash back into businesses weeks or months before their customer eventually settles the invoice, improves their cash flow and reduces the reliance on other sources of funding such as overdrafts. SMEs now have a quick and low-cost way to cover their overheads, pay their bills and grow their businesses. Like our banking partners, we believe that many more companies would use invoice financing if only it were made easier and more flexible for them. We created Platform Black to meet that need.”