SECTOR FOCUS: FINANCE SECTOR FOCUS


THE LATEST NEWS FROM THE REGION’S LEADING SECTORS


Finance in the ‘new normal’


The financial world has been stood on its head with unparalleled levels of liquidity injected by Central Government. Tim Jones (pictured), explores what might be next.


T


he support for small business was clearly welcome and will have helped many to survive. The next challenge is how to fund bouncing back along with all the new operational requirements. The high street and challenger banks who have administered the


Coronavirus Business Interruption Loan Scheme (CBILS) and Bounce Back loans will in time return to a new normality considering additional working capital requests but on what basis? How will the old security and affordability tests be applied to


companies that have survived the crisis but have affected profitability and balance sheets? Add to this the inevitable background of missed


payments and company insolvency within a fragile economy and it is obvious that things are not going to be straight forward. There is always however a choice and if you have


failed to get funding from your own bank there are over 40 CBILS and nearly 20 BBLS providers so an initial refusal may be turned into an offer from another funder. Clearly articulating your company’s current financial


Some traditional financial products such as asset finance may now be


worth considering to help preserve cash. Paying for a hard asset such as a vehicle over its use is common place but the same principle can be applied to soft assets like an office refurbishment or IT including software. The key is to arrange the facility in advance so that the funder pays the


supplier direct. Financing an IT project is relatively easy when new but much more difficult to do retrospectively as it is perceived to be a cash raising exercise and subject to tougher scrutiny. The most valuable security in a business dealing with other


‘It is always


more difficult to get additional funds when your back is against the wall’


position and even more importantly the projection is key in any funding request so working effectively with your Accountant has never been more important. We know we get better offers for clients in terms of rate and quantum


where the Underwriter has been presented with a coherent proposal answering the key criteria to make saying yes easy. Timing an application so that you are in your best position makes sense even if you end up refreshing the credit if circumstances change. It is always more difficult to get additional funds when your back is against the wall and the choice of provider inevitably reduces.


26 Chamber Profile Summer 2020


companies is the sales ledger as this is the closest asset to cash. Traditionally, invoice finance was seen as funding of last resort but now many businesses have a confidential facility instantly accessing a percentage of their sales with the client unaware of the transaction. This market has always been competitive and now it has evolved to add on other facilities linked with the provision of Confidential invoice Finance including CBILS or BBLS


loans, stocking finance and bad debt protection. Even if you are currently in a contract with your bank it is worth a review prior to renewal of terms to make sure you have an arrangement that best fits your current working capital requirements


and not just a roll over from last year. In our experience the worst thing that can happen is you pay less for what you are currently doing. Fit businesses that adapt will bounce back at a rate reflective of their particular market. Businesses with underlying symptoms may need some additional help to return to a new normality but either way some commercial financial planning and action makes sense.


Tim Jones is Director of Start Point Finance startpointfinance.co.uk


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