Sector Focus


Finance


Sponsored by: Lawrence Business Finance


Business finance traps and avoiding them


By Matthew Lawrence, of Lawrence Business Finance


Sharp practice exists in finance, as in any industry, but finance is complicated, and the “traps” I’m talking about generally arise more by default than design. Traps can be there at the


start, or they may develop later. Avoid them or reduce their impact by thinking carefully about best funding structure and, if necessary, paying for flexibility, to reduce risk.


At the start - accepting inappropriate finance and terms for the business - examples: • Taking fixed sum loan rather than invoice finance facility, restricting borrowing capacity and ability to fund growth


• Accepting loans without understanding “loan covenants” restricting dividends even when loans are serviced, and profits are there.


• Accepting anything, because you’ve left it late, then finding you’re tied into onerous terms – “Borrow in haste, repent at leisure”


Later - business circumstances change, and existing funding becomes inappropriate - examples: • Invoice finance taken to fund core business not just debtors, creates a hole if sales dip


• Investment pays off late, if this is debt not equity funded, it may create cash flow crisis


• Model change from credit to cash sales, get stuck with a long I/F facility or a penalty


Things change and some traps are unavoidable, so: • Start early, explore options, get finance to fit a flexible future


• Read and understand agreements including small print


• React to change quickly but don’t go from the frying pan to fire


• Take advice unless you’re certain


To find out more, contact Matthew on 07770 683874 or email matthew@lawrencebusinessfinance.co.uk www.linkedin.com/in/matthewjlawrence1


68 CHAMBERLINK November 2019


Deals market remains buoyant despite doubt


Accountant PwC says the Midlands deals market is remaining buoyant, despite the uncertainty being caused by leaving the European Union. The firm’s transaction services team has completed deals with a


combined value in excess of £1.1bn across the Midlands region so far in 2019. The team continues to work alongside a range of corporate and private equity (PE) clients and across a spectrum of businesses and sectors, including telecommunications, healthcare, financial services, retail consumer and leisure, and industrial products, working on more than 21 completed transactions between January and August. The firm provided core financial, commercial, technology,


operational and tax due diligence services alongside the work of specialist teams including data analytics, sale and purchase advice, valuations support, capital markets advice and debt advisory services. The start of the year saw some significant


completions. In March PwC advised on the acquisition of Pallet Track Ltd by TPA Capital and the sale of Care Fertility Holdings to Silverfleet Capital. In August, the team advised the management team of Foster + Freeman on their management buy-out from founder shareholders supported by Primary Capital Partners, as well as advising on the acquisition of Millbrook Healthcare by Cairngorm Capital. Matthew Tombs, transaction services partner for


PwC in the Midlands said: “We are delighted with the level of activity we have seen in 2019 so far, despite the uncertain economic and political backdrop and we’re proud to have supported a fantastic range of clients. We continue to remain optimistic about the pipeline of deals activity and are keen to engage with clients to explore ways we can add value to their process, leveraging our depth of knowledge and expertise.”


Matthew Tombs NatWest unveil biometric card


NatWest has become the first UK bank to unveil a biometric credit card, which will allow users to make contactless payment for transactions of up to £100. These transactions have to be


verified, though, by a fingerprint on the card which is checked by the terminal machine. At the moment, the cards are not


in general use but are the subject of a three-month national trial. Outside of the trial, the cards can


NatWest is trialling its biometric credit card


be used for regular transactions at cash machines and for online shopping, as well as existing chip and PIN terminals. Georgina Bulkeley, director of


innovation at NatWest, said: “After the successful pilot of our biometric debit card we are looking to test the technology further with credit cards. “This is the biggest development


in card technology in recent years and not having to enter a PIN not


only increases security but makes it easier for our customers when paying for goods or services.” NatWest says that placing the


digital fingerprint on the card is a straightforward procedure which only takes a couple of minutes. Once the digital fingerprint is


locked on the card it cannot be changed, and NatWest says the system is designed to be foolproof. The system has been designed in


conjunction with digital security specialist Gemalto, whose spokesman, Howard Berg, said: “Biometric has a big role in the future of payments and we’re pleased that more NatWest customers will be the first to try out this simple, convenient and secure way to pay. “We’ll work very closely with


NatWest as the trial progresses to address feedback from users and make sure they’re getting the best experience possible.”


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