The study, commissioned by Hitachi Capital Invoice Finance (HCIF), found that SMEs are accessing cash advances against invoices only as a "last resort".
HCIF head of commercial business John Atkinson said: "The number of companies using IF is less now than 10 years ago, which is surprising considering the economic climate."
Invoice financing is a short-term borrowing agreement whereby a business can draw cash from lenders against its invoices ahead of receiving payment from the customer.
The OnePoll survey of 1,000 small business employees found that nearly half of respondents had experienced problems with cash flow in the past year, although around the same amount dismissed IF as an option for boosting their business.
Disturbingly, 951 companies said they were restricted by lack of cash flow, 27% of which said it interfered with hiring and training of staff.
Atkinson said: "Because commercial printing relies on a careful balance between paying suppliers for raw materials and receiving payment from clients, it’s an industry that is particularly vulnerable to cash flow issues. If you don’t have access to ready cash at any given time, it can seriously affect your ability to meet consumer demand and promote and develop your business."
He added that advancing technology and an increasingly competitive market meant that print businesses had to work harder than ever to be profitable.
But only 24 respondents were using IF to unlock cash, while nearly a fifth preferred borrowing from friends and family.
Atkinson added: "It’s scary to see from the research that nearly half of SMEs are sourcing finance from secured loans (20%), bank overdrafts (17%) and even credit cards (12%) – which are all high chargers – instead of opting for cost effective and simple means."
He said that the misperception that IF was "expensive and complicated" and could lead to businesses "losing control" was detrimental to growing SMEs. Atkinson claimed that companies using IF were growing quicker than rivals without factoring in place, despite widespread opinion to the contrary.
The most popular financing option was a bank overdraft, with 168 companies having had one in place during trading, but only 216 SMEs said they trusted their bank manager for advice on cashflow.
Atkinson said that HCIF was targeting those using overdrafts with its new Inspired Cashflow IF scheme, which he claimed was a cheaper yet more beneficial option.
It offers companies with an annual sales turnover of £1m IF cash advances for 1.5% of each sales invoice raised, while £4m-turnover businesses will contribute 0.95% for a standard advance rate of 85% of the invoiced amount.
HCIF launched the "uncomplicated" IF scheme – which allows customers to terminate their contract at any time in the first six months – in September as part of its strategy to lend £500m to SMEs in 2013/14. In October, the single-fee scheme has brought in 100% of HCIF’s new business.
Atkinson believes that personal familiarity with overdrafts has boosted their popularity among small business owners.
Inspired Cashflow was designed to fit in with the wealth of alternative lending available, but Atkinson claimed that it was more "mainstream" and easier to access than some existing frameworks.
He added: "Unlike many cash flow solutions, invoice factoring is more than a short term credit injection – it offers you an opportunity to make real mid-long term improvements to the way you run your business.
"If you run a small to medium sized enterprise, the time spent chasing up unpaid invoices can be a drain on your time that could be better spent elsewhere. If you hand over the responsibility to factors, you can channel your resources into more profitable areas of your business."
