A new report has found that the cost of borrowing money for small and medium size enterprises continues to rise as the economy struggles to sustain and meaningful recovery. Risk-averse banks have lifted borrowing interest rates and tightened the conditions on which loans are offered - a major bone of contention for businesses under threat of going under or perhaps looking for fresh funding to cover the cost of expansion.

Many are turning to factoring as an alternative to traditional loans and overdrafts. Under factoring a business chooses to pass on an existing invoice to a factoring company who pays a percentage of that invoice straightaway. The balance is received when an invoice is settled with the factoring company taking their own % cut and charging an administration / commission fee for handling a businesses’s credit management.

It is not cheap - but turning an invoice into cash immediately can be a lifeline. This BBC news report looks at the case of James Winnister who runs a security and fire installation business, and has to use factor invoicing to manage his cashflow.