Tag Archives: Access to Finance

Weekly digest

The week completed, 4th September 2015

JMS

It’s estimated that 20% of the workforce take their annual leave during August, although anecdotally, based on calls made, it feels as though this estimate should be higher. Certainly the decision making process within many SME’s appears to halt altogether at this time of year.

Historically, September has been a busy and productive month as businesses return to normal, often with management having had time away from work to evaluate their business and its aspirations. This may involve a review of existing finance facilities to ensure their suitability to meet aspirations and objectives.

As management consider their finance options the scope of facilities has never been wider but it is still estimated that just over 50% of SME’s are not aware of any options available away from their own bank. Given the attitude and abilities within the banks this effectively means that many, many businesses are ill served and may struggle to access finance that is readily available but they are just not aware it exists.

If it is correct that over half of SME’s are unaware of all the options available then that fact reflects poorly on banks and other professional advisers who have the ear of SME’s. It should be incumbent on banks to point their customer in the direction of the most appropriate finance and likewise professional advisers ought to be aware of the funding market as a whole.

 

Highlight of the week was a day at the races with the Ultimate Finance Group, they fit into the category of alternative finance providers offering a range of SME facilities from construction, asset and trade finance through to invoice finance. Aside from the horse racing (and tipping winners is not amongst their skills!) learning more of their offerings was extremely useful.

Having already referred a couple of deals to them, successfully converted, they seem to take an innovative approach to client funding, so far much appreciated by the actual clients.

Racing with Ultimate

 

Weekly digest

The week completed, 28th August 2015

JMS

The holiday season is drawing to a close and new business enquiries still very much reflect the time of year; what has been positive over the last few weeks has been the conclusion, positively in the main, of some long term negotiations between funders and borrowers. Consequently our introductions have seen 4 businesses, in vastly different sectors, from food to textiles, benefit from additional funding.

In two cases businesses are using invoice finance for the first time with the other two moving from a High St Bank owned invoice financier to an independent.

This month the Government have got involved with invoice finance and, unusually, it seems to be a positive move, albeit one that they say wont be introduced until next year.

The proposal will see an end to ‘Ban on Assignment’ clauses, a tool sometimes used by large buyers and particularly utilised in the construction industry. The clause in the contract between buyer and supplier prevents the supplier from using the invoice to raise funds.

By way of an example there could be a situation where a small supplier provides goods or services to its large customer. The customer, in the contract, imposes a Ban on Assignment clause. Practically this serves little purpose but restricts access to funds as the supplier is unable to use any invoice raised for finance.

Hopefully this will be seen through to conclusion and wont simply be a positive announcement from central government that then gets quietly forgotten about………..we shall see.

Economic fact of the week and a striking one coming out of The Birmingham Post  is that Midlands based Chief Executives of stock market listed businesses earn an average of £1.23m a year, around 50 times more than the average Midlands full-time salary of just under £25k. Its a fair assumption that this would be replicated across the UK.

There’s no objection to anyone earning any amount but the discrepancy here is noteworthy.

Undoubtedly the personal highlight of the week was a trip to the Royal Shakespeare Theatre to see Othello. Despite having lived and worked in Stratford for 25 years it was the first time since school back in the 1970’s.  Its an incredible performance, as I’m sure they all are, and the RSC is a real gem in the Midlands generally and Stratford specifically.

RSC

Weekly digest

The week completed, 23rd January 2015

JMS
worried businessman
Slow Payers are driving me mad!

The weekly review starts with a bit of a rant! A number of instances seen this week of large businesses withholding payment to suppliers for no legitimate reason. This is a grubby, sharp practice many large businesses, including household names, seem to think acceptable business practice. It isn’t. If a business buys goods or services on terms then the buyer should adhere to those terms. A perfectly viable business can be ruined by its customer extending payment terms.

Some businesses, again including household names, appear to adopt an almost macho posturing attitude towards paying suppliers.  It is not always practical for a small supplier to take an ultra assertive approach with the customer leaving the supplier vulnerable to bullying tactics. Solutions to this problem are difficult and to a certain extent a cultural shift is needed.

 

Bank of England minutes show that all nine policy makers agreed on holding Base Rate at 0.5% revealing that the dissenters from earlier meetings who had voted for an increase now are happy to keep the rate set nearly 6 years.

The general view is that rates won’t rise before the May election and that any subsequent rise will be only a small increase, possible 0.25%.

Consequently funding for business remains very cheap and importantly, accessible. I have spoken with a couple of businesses this week complaining at the lack of funding. In both cases the proprietors have poor track records in repaying debt, not through a ‘can’t pay’ issue but a ‘won’t pay’attitude. It’s hardly surprising lenders will not rush to offer facilities.

A day, or large part of it, was lost trying to unravel the mysteries of search engine optimisation, any help gratefully appreciated!