Here’s an interesting infographic on how the role and the technology an IT manager encounters has changed over the past couple of decades. It’s from Absolute Software, an IT asset management and security company, and looks at a whole host of information from the frivolous like what was the most popular PC game (Doom vs Call of Duty) and what the batman logo looked like, to stats around how many operating systems and devices the IT manager has to manage today. Enjoy!
/Addressing Cash Flow Challenges Undermining Success Of SMEs/

Despite firm government pledges to improve the business landscape for SMEs, the economic reality remains tough. Banks continue to limit lending; and loans, when available, are at high rates of interest, even though UK Base Rate has been at a record low level of 0.5% per annum for nearly 3 years.

Meanwhile, despite a public sector commitment to pay invoices within ten days and a European Union (EU) directive for all companies to make payments within 30 days, in the UK late payment of trade debt was recently described as “endemic” by the Institute of Credit Management. Large companies are the worst offenders, paying smaller suppliers on average 34 days after their contractual terms (which range from 30 to 90 days).

The impact on the cash flow of SMEs can be devastating. Yet there are steps that can and should be taken to both improve invoice processing, and hence payment timescales; to enable banks to make lower risk loans to business and to exploit supply chain financing to deliver benefits to both SMEs and their customers.

In this post I’d like to outline the importance of e-Invoicing in streamlining payment and facilitating supply chain finance to transform SME cash flow and add significant impetus to the UK economy.

SME Value

Small and Medium Enterprises (SMEs) are arguably the bedrock of the UK economy. According to figures from the Department for Business Innovation & Skills, SMEs account for 59.1 percent of private sector employment in the UK and 48.6 percent of private sector turnover. These businesses employed an estimated 22.5 million people in 2010 and had an estimated combined annual turnover of £3,200 billion.

Yet these organisations are operating in a fundamentally different economic climate to the vast majority of their larger competitors. Over the past few years, larger organisations have rationalised operations and leveraged market position to build up significant cash reserves.

Typically, banks are offering relatively low-cost credit, when required, and these businesses have been able to put huge pressure on the supply chain to negotiate prices down. In contrast, small companies are seeing margins eroded and are bearing the brunt of the banks’ continued reluctance to lend. “The average interest rate on smaller loans, of £1m or less, is already double that charged on loans of £20m or more and we expect this trend to continue”, according to Neil Blake, Senior Economic Adviser to the Ernst Young ITEM Club Feb 2012.

Combined with the increasing delay in both international and domestic payment, it is little wonder that cash flow is a major concern. Indeed, according to the British Chambers of Commerce’s latest Quarterly Economic Survey, cash flow remains a real concern for businesses as a result of unfavourable payment terms and a lack of access to capital.

Change the Model

It is clear that the government’s pledged support for SMEs is not realising benefits. Project Merlin has made little, if any difference, to the SME marketplace; whilst the requirement for public sector organisations to pay invoices within ten days is simply not happening because it takes too long to get paper invoices approved and processed.

Short payment targets are clearly meaningless if the fundamental building blocks are not in place to transform the way suppliers are paid. Unless invoices can be rapidly approved and processed, there is no opportunity to reduce payment times. Yet while today a large proportion of both orders and payments are made electronically, some 90% of invoices are still submitted on paper. Unless organisations make the transition to electronic invoice provision it will be impossible to transform payment timescales and, hence, improve SME cash flow.

Cash flow Building Blocks

In Europe, many governments have taken the decision to implement e-Invoicing across the public sector in order to support a faster payment and more cost effective model. These government mandated initiatives typically require any organisation doing business with the public sector to submit invoices electronically as a means of improving processing efficiencies.

With e-Invoicing and invoicing best practice, SMEs can get the invoice in to the buyer quickly, accurately and in the right format. In addition to enabling SMEs to cut costs, improve credit control and get paid quicker, e-Invoicing offers significant benefits to buyer organisations. Automatic integration of invoice data directly into back office systems enables approval, payment and reconciliation processes to be streamlined.

Furthermore, e-Invoicing provides the platform for far more effective and innovative financing models – ranging from the adoption of corporate Direct Debits (such as the new SEPA B2B Scheme) to the use of supply chain financing to improve SME cash flow.

This latter model is compelling for both banks and businesses alike. Given the increasingly tightly integrated physical supply chains, there is clearly an opportunity to leverage the strong credit of the buying organisations – retailers and the public sector for example – to improve the cash flow of suppliers. Indeed, some enlightened organisations such as Tesco, B&Q and Marks and Spencer have introduced supply chain finance that not only ensures suppliers get paid quicker but also enables these suppliers to borrow at a lower rate of interest.

The key to this model is the visibility of supply chain finance, enabling banks to make decisions based on real time information, including order commitments, delivery notes and invoices received. This is a more dynamic environment than traditional balance sheet based lending, which relies on historic accounting information, instead of the more innovative SCF which is based on current business activities, such as buying and selling goods.

Basing the credit decision on real time information, verified orders and approved invoices from strong, trusted businesses results in significantly lower risk to the banks – an improved risk scenario whose benefit can then be passed onto the SME in the form of lower interest rates.

For the large buying organisations, this model also has strong appeal. Not only does it improve the financial viability of a tightly integrated supply chain, minimising the risk of supplier failure which can have a devastating impact on multiple businesses, but it also provides an opportunity to negotiate different payment terms, trading improvements in supplier cash flow for product discounts, for example.


With the economic outlook for 2012 appearing no less challenging than 2011, it is becoming essential to address the cash flow challenges that are undermining the success of SMEs and, hence, the prospects for UK recovery and growth. Yet the banks remain reluctant to incur the risk associated with SME loans; while SMEs are facing increasingly unfavourable payment terms.

Relying on paper-based invoicing processes leaves SMEs with little room to manoeuvre – the only real bargaining option is to offer customers a discount for rapid payment. By adopting e-Invoicing, organisations can not only drive down costs and get access to payments sooner but, critically, begin to explore new opportunities for flexible, lower cost financing that can transform cash flow.