Tag Archives: alternative finance

Weekly digest

The week completed 13th November, 2015

JMS

Factoring Partners

Factoring Partners can save you time & money!
Factoring Partners can save you time & money!

As Factoring Partners enters its 20th year of trading this week looks at types of finance raised and the capabilities now.

Back in 1996 the very first business assisted was an importer and distributor of footwear with funds raised enabling purchase of a consignment from (I think…memory fading) Portugal. The second business was a facilities management business providing repair/remedial work to local authorities and councils. This business remained a client for 15 years.

The first two clients very much reflect what happened subsequently with some clients seeking relatively short term finance to assist with a specific transaction whilst others bought into long term relationships.

Over 50 different financiers have been used and we remain capable of offering businesses an entire appraisal of the commercial finance sector. This is attributable to our independence, many competing brokers are effectively tied to a limited collection of lenders given the reciprocal nature of relationships they have.

We have sourced and placed asset finance (from trains to cars to heavy machinery), property finance (from owner occupied to rented), invoice finance, trade finance, export finance and, most recently, short term finance for a retailer.

Businesses helped cover an enormous range in terms of activity (all manner of manufacturing, distribution, importers etc) and by way of size go from a £50m t/o (annual) business down to £25k.

As mentioned in previous blogs there are plenty of lenders, from the generic (who will write most facility types, such as the banks) to the highly niche. Our job is to know as many as possible to facilitate the most appropriate referral. Lenders continually change their credit policies and again it is our job to keep up to speed, the aim being to save businesses time and money in their quest for finance.

We can source business finance same day (seriously, up to £120,000) or work to time scales as dictated by the enquirer.

In 1996 when Factoring Partners first started the internet was very much in its infancy and the capabilities it brings to businesses, at that time could not be imagined. Whilst communication and marketing methods have changed materially in the last twenty years one constant that remains is the need a business has for cash and that is where Factoring Partners can and does help.

Weekly digest

The week completed, 6th November 2015

JMS
Remember
Remember

 

Alternative Finance

With interest rates remaining so low, and no sign of any imminent rise, those with funds are looking for a return greater than available via conventional sources. There are a lot of new businesses setting up as lenders to the SME sector and many are using funds from private investors to offer invoice finance facilities.

Whilst this brings extra choices to borrowers its not without risk, from all angles. Investors are enthused by the promise of returns in excess of 10% but there are more than a few issues to possibly dampen this enthusiasm. Investors putting funds into conventional savings vehicles are afforded a degree of protection, placing funds into invoice finance comes with absolute risk.

Invoice finance providers are well used to managing portfolios and risk that comes from financing an asset as fluid as an invoice. They tend to bear in mind the seemingly constant stream of attempts to defraud financiers from the raising  of completely spurious invoices to collusion between buyer & seller.

Whats concerning is the new single debtor financiers, using investors money, and cutting corners as far as risk management and evaluation is concerned. To the lenders, there will be inevitable losses and investors, far from achieving their 10% + returns may find their capital at risk.

Caveat Emptor and all that applies and investors, as long as they are aware of potential losses enter eyes wide open. My concern lies with genuine businesses, funded by a lender with a compromised book, then struggling to access finance from the financier with whom they have an agreement.

I have been approached by two new ones this week offering selected debtor or invoice finance and the numbers of funders is continually rising. With no sign of an interest rate rise this trend is set to continue. More than ever the independent adviser/broker has an important role to play.

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, 6th February 2015

JMS

After last weeks tedium came a far more exciting (probably too strong a word) and productive week.

A very illuminating day with Market Invoice learning about their alternative finance offering. They present a cost effective, flexible alternative source of finance to businesses supported by strong operational systems to look after investors funds.

I’m told they have provided finance in excess of £100k as little as 90 minutes after first contact.  This speed of response and allowing businesses the flexibility of financing specific invoices is a real departure from the whole turnover requirements usually imposed.

This week we came across some huge differences in credit insurance limits. I have a potential client who sells to one major customer, a name with which many readers would be familiar. Suggested credit limits ranged from £15k to £200k, suggesting either one particular credit insurer knows something the others do not or is unrealistically conservative.

Credit Insurance provides good cover over one of a businesses major assets i.e outstanding debtors, so often overlooked when it comes to insurance. It is worth shopping around for cover and there are specialists is this sector. Premiums vary considerably with 0.2% to 1% being the type of range found.

Issues over payment policies to suppliers rumble on and an investigation was announced this week into Tesco’s treatment of its suppliers. A queue is now developing of bodies looking into Tesco’s over an assortment of allegations. Maybe they could gain themselves some strong publicity by agreeing to pay suppliers to a mutually agreeable term and set something of a precedent with other large buyers at the same time.

 

And so to Cardiff……..

 

.rugby

Weekly digest

The week completed, 14th November 2014

JMS

A week mainly spent talking to businesses, both local (Midlands) and National. Whilst the numbers may not be a representative sample, anecdotally, those businesses to which we spoke appear to have access to working capital, from a variety of sources.

There are, of course,  businesses who cannot access finance but they usually fail the acid test that any funder would apply, i.e. ‘would I personally lend this company my money’

New funders are continually appearing not only within invoice finance but also within alternative finance sources such as peer to peer lending. Some alternative funders are becoming more certain of themselves, using the media (TV, Funding Circle  & Radio, Market Invoice) to put their messages across. This suggests a certain critical mass has been reached and these funders are confident enough to invest in spreading their news.

In a week when a few well known banks have been fined over £2.5bn for rigging foreign exchange rates the timing for alternative financiers seems appropriate. Confidence in High St banks is not good and the notion of relationship banking, as preferred by many businesses, is ignored by many of the banks.

With the return of the German Market to Birmingham a few trips to the Second City become a necessity!

How to select an invoice financier

How to Select an invoice Financier

JMS

An invoice financier will develop a close working relationship with your business and can be instrumental in its success or otherwise so it is worth spending time on the decision and evaluating a number of options.

Chances are your bank will be the first call. All the major UK banks offer, mainly through one of their subsidiary’s, invoice finance and in many instances choosing your bank will be the safest and most appropriate option.

There are a significant number of options available, not just in the number and type of provider but in the range of facilities, including the newer alternative funding sources such as peer-to-peer, auction finance, supplier finance and so on.

If settled on the idea of invoice finance, again there are options and service levels to consider. With bad debt cover or not, disclosed or confidential, all customers or just some and so on and so on.

This is where a good, independent, broker can help. Experienced and well connected are essential qualities but so is independence. A broker should be free from ties and should make any introduction based on what is best for the client not best for the broker.

I have placed business with over 30 different financiers and am free from the type of tie which means I can only utilise a few funders, I can and will access the entire market