Lending firm Positive Cashflow Finance today toasted its maiden annual pre-tax profit as it continued to capitalise on the banking squeeze, and said it has increased its own facilities by £5m to £20m to fuel expansion.

The Manchester-based firm, which provides invoice discounting and factoring finance to small businesses, also said it was looking to open a new regional office, possibly in the Midlands, as it aims for another year of double-digit growth.

Positive Cashflow Finance, which was set up in December 2007 by David Smith, Peter Davis, Phil Chesham and Simon Cook with backing from private equity outfit Infinity, posted pre-tax profits of £467,000 for the 12 months to the end of November against losses of £80,000 in the previous year.

Fee income rose from £1.8m to £2.9m as it advanced £13.5m to customers during the year, up 35 per cent on the previous 12 months. Since the start of December, its loan book has grown to £14.5m.

The firm, which has 22 staff, provides funding for buyouts, acquisitions, working capital and restructuring to companies with turnover of between £100,000 and £10m.

It lends to businesses involved in sectors including sectors including manufacturing, chemicals, food processing, engineering, IT, transport, recruitment and printing. More than 90 per cent of its lending is to firms in the north west.

Managing director Mr Smith said client numbers grew 14 per cent to 120 last year.

Positive Cashflow Finance derives its income by charging a percentage of customers' turnover. Last year, its clients achieved total sales of £180m, up from £110m. Mr Smith said the firm had begun the new year strongly as customers' revenues continue to improve.

He added: “The banks have continued to be very cautious in their lending to SMEs and this has certainly benefited us.

“It has provided us with opportunities to go into long-established businesses that are battle-weary in dealing with the banks. We completed 60 new deals in the year.”

Mr Smith added: “We have also seen a real swing by entrepreneurs to deal directly with the decision makers, and that's what they get from us.

“I think that economically things will continue to be tough this year, but we are focused on helping businesses that are expanding.”

Since the start of 2011, the firm has established a sister company, Positive Credit Management, a business-to-business credit collection operation. It has also increased its facilities from £15m to £20m to enable it to grow its loan book further.

Mr Smith said the firm would continue to seek suitable acquisitions during 2011.

Tweet