By David Banfield is the President of The Interface Financial Group

MP Tom Blenkinsop recently brought our attention to the challenge the British steel industry faces due to what he called 'unfair competition' from China. In short, he described how Chinese producers are flooding the UK market with heavily-discounted products due to economic issues in their economy. However, that argument is a little too simple. Chinese manufacturers have always been able to undercut Western prices thanks to the low cost of labour, abundant mineral resources and so forth. Indeed, when you look at it, multiple industries - from telecoms and electronics to automotive and e-commerce - are all under pressure from the East. It’s important to remember though that price is only one piece of the puzzle, and one that British enterprise cannot and must not get caught up on.

The fact that it appears that China is being undercut by India, where Chinese and foreign manufacturers are being enticed by lower wages and less rigid regulation, illustrates the danger of focusing so heavily on price.

While it’s clear that more Government support to British SMEs is greatly needed, it is up to each of us as business owners to identify means and methods of carving out a niche that goes beyond price. In much the same way that Germany is synonymous with the production of high quality cars and Ireland is famous for its beef and dairy production, the bottom line is that British businesses must look towards innovation and quality as areas where we can establish points of difference. In doing so we can command a higher price for our products and avoid a race to the bottom that inferior suppliers often get caught up in.

The problem with this though is that innovation and quality tend to mean greater financial investment, and it is here that so many small and medium-sized enterprises (SMEs) start making excuses. Just because the banks are slow to lend to SMEs is a poor excuse for not investing in your business.

One distinct advantage that the UK has over both China and India is its highly innovative and developed financial sector. Saying that the banks aren’t lending is a poor justification when there are so many financing options available today. Despite the fact that the UK is a global leader in this space, it is fair to say that the secondary finance market and its innovative services, which incorporate everything from crowdfunding to invoice discounting, are not ‘talked up’ enough and in many cases may be under-utilised, which may explain the arguments put forward by those claiming they can’t gain access to capital for innovation.

Aside from other asset based lenders, credit cards and peer-to-peer, one strong viable option for many SMEs to gain almost instant access (to their own) cash, is spot factoring. For many small businesses, it isn’t a lack of business hindering investment, rather it is waiting for the payment from said business. In actual fact, a dramatic surge in business can severely hamper cash flow, with funds going towards servicing the influx in demand.

New customers that are able to provide substantial orders are often in charge of the transaction. They have the buying power to dictate when they will pay and the supplier, if they wish to retain the business, has little option but to accept what often turns out to be extended payment terms. Spot factoring turns those new sales into instant cash, allowing the UK’s SMEs to invest in building better and more unique products that can compete on more than just price.

Ultimately, a little research along with growing support from the Government for alternative finance, should result in better informed business owners, confident in their financing options and keen to invest in their companies, safe in the knowledge that they can leverage everything from assets to debtors to facilitate future growth.