Month: June 2025

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Finance Article

Why More SMEs Are Turning to Business Finance Products, And What It Means for Growth

Why More SMEs Are Turning to Business Finance Products, And What It Means for Growth

In today’s economic climate, SMEs in the UK are under growing pressure to maintain cash flow, remain competitive, and invest in long-term growth all while navigating complex global markets. As a result, a rising number of SMEs are integrating business finance products into their financial strategies to help manage working capital, bridge operational gaps, and maintain momentum.

At Affinity Exchange, we recently launched a suite of business finance products following consultations with clients about the challenges and ambitions they foresee in the year ahead. These new solutions are designed to expand the scope of how we support businesses enabling us to play an even greater role in helping them achieve their growth targets, which has always been at the core of what we do.

A Growing Trend: SME Demand for Business Finance

Recent figures underline this trend. According to research from Shawbrook, around 78% of SMEs accessed alternative finance in 2024, up from 73% in 2023. Specifically, 56% reported using invoice finance, an increase from 48% the previous year. This suggests a growing reliance on alternative financing methods among SMEs. While traditional bank loans still remain a component of this picture, more dynamic products are becoming increasingly central to how SMEs operate and scale.

This growth is not just reflective of economic necessity, it also signals a shift in how smaller businesses are structuring themselves financially. Businesses are increasingly viewing finance not just as a contingency, but as a strategic lever to enable growth.

Why Certain Sectors Lead the Uptake

Some industries are more likely than others to embrace these solutions, and for good reason. Through our own research we have identified the three main industries leading the way in finance products.

  1. Wholesale and Manufacturing
    These sectors face long payment cycles, needing to pay suppliers well before receiving payment from customers. This working capital gap puts strain on operations, especially when order volumes increase. Here, both supplier and trade finance are essential tools that allow firms to access capital tied up in supply chains, giving them the breathing space to fulfil larger contracts and expand.

  2. Construction
    Payment lags, project-based revenue, and upfront material costs make construction one of the most cash-sensitive sectors. With razor-thin margins and significant upfront commitments, the ability to manage cash flow predictably is critical. Finance products help ensure continuity between project milestones and client payments.

  3. Retail and eCommerce
    In highly competitive industries where price is a key differentiator, businesses often cannot afford to pass rising costs onto consumers. To avoid losing market share, many are turning to finance tools that help spread operational costs, manage inventory, and invest in customer acquisition while maintaining profitability.

 

How These Products Help Businesses Grow

Finance tools play a crucial role in smoothing cash flow, enabling businesses to take on larger orders, extend payment terms to clients, and negotiate better terms with suppliers. Crucially, they allow SMEs to stay agile and react quickly to market opportunities without being constrained by liquidity issues.

At Affinity Exchange, we work with businesses every day integrating these financial tools into their broader growth strategies. As an international payments and risk management provider, we help SMEs maximise working capital, reduce friction in cross-border transactions, and protect themselves against currency volatility. Whether a business is importing raw materials or expanding into new markets, we provide the strategic financial infrastructure that allows them to do so confidently.

The future of SME growth lies in smart, integrated financial models. Business finance products are no longer just a stop-gap measure, they’re part of a proactive strategy to ensure scalability, manage risk, and stay competitive in a fast-changing world.



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Market Report

02/06/25 Weekly FX Market Report

02/06/25 Weekly FX Market Report

As June begins, global currency markets are being shaped by a tug-of-war between policy decisions, geopolitical developments, and investor sentiment. The British pound surged to multi-year highs, the euro defied rate cut expectations to stay firm, and the U.S. dollar slipped under the weight of renewed trade tensions. With central bank meetings, key economic data, and political headlines on the horizon, the week ahead promises to be anything but quiet.

GBP Climbs to Multi-Year High on Economic Resilience and Defence Spending

The British pound reached a three-year high, trading around $1.355 against the U.S. dollar. The rally was underpinned by renewed confidence in the UK economy, better-than-expected manufacturing and housing data, and a major defence spending plan unveiled by Prime Minister Keir Starmer. These factors boosted sentiment and supported the view that the Bank of England may not need to cut rates aggressively.

Policymaker Catherine Mann is scheduled to speak, and any signals about the BoE’s monetary policy stance could sway the pound. Upcoming housing and consumer sentiment data will also be closely watched for confirmation of economic strength, or signs of a slowdown that might reverse recent gains.

EUR Holds Ground as Investors Bet on Fiscal Support Over Rate Cuts

Despite a dovish European Central Bank, the euro held firm and continued its recent appreciation. A major contributor has been Germany’s commitment to boosting defence and infrastructure spending, which is helping offset the downward pressure from interest rate cuts. Capital outflows from U.S. markets into the eurozone also played a role in supporting the currency.

The ECB meets on June 5 and is expected to deliver a 25 basis point rate cut. However, markets will be focused on forward guidance, particularly hints that the rate-cutting cycle is nearing its end. German fiscal updates and EU-wide inflation figures will round out the euro’s key drivers this week.

USD Under Pressure Amid Trade War Fears and Domestic Fiscal Uncertainty

The dollar slipped to a six-week low as President Trump announced a doubling of tariffs on steel and aluminum from China, reigniting fears of a trade war. In parallel, a new $3.8 trillion tax and spending proposal raised concerns over fiscal stability and long-term inflation. These developments combined to sour investor sentiment and weaken the greenback.

Markets will react to any retaliation from China, with tariffs set to take effect on June 4. On the domestic front, Friday’s U.S. jobs report will be critical, especially if it reshapes expectations about the Fed’s next move. Softer employment data could reinforce the recent downward pressure on the dollar.

With central banks at inflection points, economic data poised to surprise, and trade tensions simmering beneath the surface, currency markets remain delicately balanced. Will the ECB’s cut mark a turning point? Can the pound hold its ground? And how far might the dollar fall? Investors may not have to wait long for answers, but the next move could easily defy expectations.

Market Report by Jack Scorgie