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Where to invest in today’s financial environment?

01 May 2016

In the current business environment, businesses must seize opportunities to invest in future business growth.

Britain’s businesses are gradually moving into expansion mode as the economic outlook improves. More than half the small and medium-sized enterprises (SMEs) surveyed recently said they planned to invest in their businesses this year, amid increasing optimism for their growth prospects.

In practice, however, investment means different things to different companies, as leading finance directors will tell you. Finance directors are now beginning to take a lead role in the strategic direction of their companies in a growth environment.

At gambling firm Betfair, a restructuring has occurred that has saved the business £30m. At international catering group Sodexo, Siân Herbert-Jones says businesses must be prepared to take every possible opportunity to enter new markets.

In the current business environment, businesses therefore must seize opportunities to invest in future business growth. Finance directors must also decide how to fund such investments. With 4 in 10 SMEs now actively seeking funding, access to finance is a crucial issue. Without that finance, growth plans may be thwarted.

In a marketplace where traditional sources of finance may not be available or appropriate, it is important that finance directors consider every possible avenue of potential funding. This includes the value locked up in a company's assets, such as its unpaid invoices, inventory and property. Alternative finance options such as invoice finance and asset based lending (ABL) offer an opportunity to access this value, improving cash flow and freeing up funding for investments in future growth.

Finance directors are now showing remarkable imagination as they plan strategically for future growth, investing in different ways to achieve their ambitions. The modern FD now needs to be equally imaginative as they plan how to fund these investments.

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Key Takeaways

  • Identify your key growth opportunities and prioritise your business activity around these areas
  • Establish the finance required to invest in these opportunities
  • Look beyond traditional sources of finance to secure the most appropriate type of funding for your plans.

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