The UK is “on the cusp of a very big break through in business finance”, according to the secretary of state for business, Vince Cable Speaking at the launch of a new guide to small business finance, produced by the British Business Bank, ICAEW and 17 other business and finance organisations, Cable outlined a positive picture for the growing army of UK small business owners and entrepreneurs. Pointing out that difficulties accessing finance have been a historic feature of the British business landscape, he said that things were definitely improving. He explained that while early business start-ups are often funded by what he referred to as “friends, families and fools”, and while at the other end of the scale there’s the stock exchange, there’s a huge gap in the middle. “It’s known as the Valley of Death. At least today there are now some oases appearing in this desert. This new guide will help small businesses seeking finance to find those oases.” The Business Finance Guide – a journey from start-up to growth is targeted at anyone running their own business and highlights the wide array of finance types now available to businesses of all size and stage of development. David Petrie, head of the ICAEW’s Corporate Finance Faculty and co-author of the report, said the crucial issue was timing. “What is crucial for business success is to get the right type of funding at the right time. This guide will help businesses achieve that.” Petrie added that because of the unique nature of the partnership behind the report, it would be sure to reach a large proportion of the UK’s 5 million SMEs. “The guide is supported by 19 partner organisations including ICAEW and the British Business Bank. It’s the first time this has happened and together they represent over 1 million members.” Also speaking at the launch, ICAEW’s chief executive Michael Izza highlighted how quickly the finance market in the UK has shifted. “Even since the Breedon Review in 2012, the market has got more complicated. This guide will help people find their way through the complexity. Really this guide is about building on the work done by the Breedon Review. It recognises that if there is not necessarily a shortage of funds, there is a challenge for those running small businesses in being able to be up to date with the new forms of finance.” The guide, which is available free to download here, covers all the various funding and finance options open to small and growing firms as well as pointing readers in the direction of further advice, help and information.
With thanks to Richard Cree of Economia
http://economia.icaew.com/news/june-2014/business-finance-improving-says-cable?utm_source=economianews&utm_medium=articles&utm_content=headlines&utm_campaign=june27
www.secantor.co.uk
Secantor
Showing posts with label Growth Fund. Show all posts
Showing posts with label Growth Fund. Show all posts
Friday, 27 June 2014
Monday, 23 June 2014
The changing world of funding part 2
Asset Based Lending
In part 1 http://secantorceo.blogspot.co.uk/2014/06/the-changing-world-of-funding-part-1.html we talked about the growing importance of asset backed lending ("ABL" ) and the decline in overdraft lending. We covered ABL facilities against debtors and also touched on stock which is viewed as a more risky lend, due to the greater uncertainty around realisable values. In part 2 we will be discussing ABL facilities in a little more detail starting with a re-visit on debtors.
Debtors often form the largest class of asset against which facilities are provided. These facilities come from all of the clearing banks but also a multitude of specialised lenders. There are a wide variety of sources of debtor finance. So what are the considerations from an SME perspective.
Management need to consider how their businesses debtor book will be viewed by the lender. Factors to consider here are the size and quality of the debtor book. The incidence of bad and doubtful debts and the quality of the customers from whom payment is due to be received. Customer concentration is also a key consideration, with lenders looking for a good spread to reduce their risk. The nature of the debts is also very important, with debtors looking for a "book" which is easy to collect out in the event that the business gets into trouble. This often precludes businesses who have long term contracts with their customers, or substantially reduces the percentage that lenders are prepared to advance. Warranties that are provided to customers are another factor which might lead to a customer holding back payment if for any reason he felt that the business maybe unable to fulfil a warranty claim. Often SMEs are asked to consider insuring, either in part, or in whole their debts which of course adds to the cost of asset backed lending.
There is now a very sophisticated market in credit insurance with many specialist credit insurance brokers throughout the country. In reality, credit insurers often have as much interest as suppliers as to whether a business survives or fails and we now see the insolvency, and turnaround professions working very closely with the credit insurers. If a credit insurer withdraws cover then an asset backed lender may refuse to advance funds on that debtor account. This puts the supplier in an invidious position. He can continue to supply but he needs to consider that the withdrawal of credit insurance means that the risks have significantly increased. If he continues to supply on credit the business not only needs to fund this, probably out of its own resources, but needs to fully understand the business exposure to a possible bad debt. An alternative is for the supplier to demand pro-forma payments but this may not be possible from a customer perspective.
Clearly, the percentage that an ABL facility provider might advance is a key consideration, but this also needs to be considered in light of the "clawback period". Debtor finance will only be in place for a period following submission of an invoice to a customer. The business needs to look at the payment cycle of its customers and to understand any variability and as importantly the reasons for variability in that payment cycle. Whilst and SME will have terms of trade with its customers and these might typically state that an invoice is to be paid 30 days following the month end of submission, the reality is often very different. As a consequence, a lender might have a "clawback provision" for invoices that remain unpaid for a period of anything between say 60 days and 180 days of the month end, following submission of the invoice. Clearly, from the lenders viewpoint if it has not been paid by then, will it ever be? Sales invoices being time barred from the factoring or discounting facility can have a devastating effect on cashflow. The SME needs to keep on top of its aged debtors and to quickly understand reasons for non-payment and resolve them.
In part 3 we will be looking at further implications for SMEs in deciding whether Asset Backed Lending, is right, or not before moving on to look at other forms of funding that should be considered in different circumstances.
www.secantor.co.uk
In part 1 http://secantorceo.blogspot.co.uk/2014/06/the-changing-world-of-funding-part-1.html we talked about the growing importance of asset backed lending ("ABL" ) and the decline in overdraft lending. We covered ABL facilities against debtors and also touched on stock which is viewed as a more risky lend, due to the greater uncertainty around realisable values. In part 2 we will be discussing ABL facilities in a little more detail starting with a re-visit on debtors.
Debtors often form the largest class of asset against which facilities are provided. These facilities come from all of the clearing banks but also a multitude of specialised lenders. There are a wide variety of sources of debtor finance. So what are the considerations from an SME perspective.
Management need to consider how their businesses debtor book will be viewed by the lender. Factors to consider here are the size and quality of the debtor book. The incidence of bad and doubtful debts and the quality of the customers from whom payment is due to be received. Customer concentration is also a key consideration, with lenders looking for a good spread to reduce their risk. The nature of the debts is also very important, with debtors looking for a "book" which is easy to collect out in the event that the business gets into trouble. This often precludes businesses who have long term contracts with their customers, or substantially reduces the percentage that lenders are prepared to advance. Warranties that are provided to customers are another factor which might lead to a customer holding back payment if for any reason he felt that the business maybe unable to fulfil a warranty claim. Often SMEs are asked to consider insuring, either in part, or in whole their debts which of course adds to the cost of asset backed lending.
There is now a very sophisticated market in credit insurance with many specialist credit insurance brokers throughout the country. In reality, credit insurers often have as much interest as suppliers as to whether a business survives or fails and we now see the insolvency, and turnaround professions working very closely with the credit insurers. If a credit insurer withdraws cover then an asset backed lender may refuse to advance funds on that debtor account. This puts the supplier in an invidious position. He can continue to supply but he needs to consider that the withdrawal of credit insurance means that the risks have significantly increased. If he continues to supply on credit the business not only needs to fund this, probably out of its own resources, but needs to fully understand the business exposure to a possible bad debt. An alternative is for the supplier to demand pro-forma payments but this may not be possible from a customer perspective.
Clearly, the percentage that an ABL facility provider might advance is a key consideration, but this also needs to be considered in light of the "clawback period". Debtor finance will only be in place for a period following submission of an invoice to a customer. The business needs to look at the payment cycle of its customers and to understand any variability and as importantly the reasons for variability in that payment cycle. Whilst and SME will have terms of trade with its customers and these might typically state that an invoice is to be paid 30 days following the month end of submission, the reality is often very different. As a consequence, a lender might have a "clawback provision" for invoices that remain unpaid for a period of anything between say 60 days and 180 days of the month end, following submission of the invoice. Clearly, from the lenders viewpoint if it has not been paid by then, will it ever be? Sales invoices being time barred from the factoring or discounting facility can have a devastating effect on cashflow. The SME needs to keep on top of its aged debtors and to quickly understand reasons for non-payment and resolve them.
In part 3 we will be looking at further implications for SMEs in deciding whether Asset Backed Lending, is right, or not before moving on to look at other forms of funding that should be considered in different circumstances.
www.secantor.co.uk
Tuesday, 17 June 2014
The climate is good for scalable investments and disruptive technologies, but what about zombie companies and the threat of interest rate rises?
The tax climate has arguably never been better for investors and particularly those wishing to take advantage of the tax breaks available through EIS and Seed EIS.
Many of these investors are looking to back disruptive technologies that can break new ground and shift the playing field. They are looking for opportunities that can be scaled quickly, on a worldwide basis, through digital marketing channels. At this end of the spectrum, the pace of change is both fast and relentless, driven by the need to retain "first mover advantage", particularly where it is difficult to secure IP on a global basis.
At the other end of the spectrum we have what has become known as the "zombie companies" that remain constrained by both their debt and their often outdated business models. These companies are in a circle which is spiralling the wrong way. Now that the indicators are there for interest rates to rise this could force the position, and these businesses should seek help whilst they still have options.
At Secantor we have the resources and capability to deal with both ends of the spectrum, and everything in between. It is not just about knowledge, although that is hugely important to us as an organisation, where knowledge sharing is a way of life, but also about our connections and credibility with providers of both debt and equity.
Nigel Bacon
Secantor CEO
Fulfilling Business Potential
www.secantor.co.uk
Many of these investors are looking to back disruptive technologies that can break new ground and shift the playing field. They are looking for opportunities that can be scaled quickly, on a worldwide basis, through digital marketing channels. At this end of the spectrum, the pace of change is both fast and relentless, driven by the need to retain "first mover advantage", particularly where it is difficult to secure IP on a global basis.
At the other end of the spectrum we have what has become known as the "zombie companies" that remain constrained by both their debt and their often outdated business models. These companies are in a circle which is spiralling the wrong way. Now that the indicators are there for interest rates to rise this could force the position, and these businesses should seek help whilst they still have options.
At Secantor we have the resources and capability to deal with both ends of the spectrum, and everything in between. It is not just about knowledge, although that is hugely important to us as an organisation, where knowledge sharing is a way of life, but also about our connections and credibility with providers of both debt and equity.
Nigel Bacon
Secantor CEO
Fulfilling Business Potential
www.secantor.co.uk
Sunday, 8 June 2014
West Midlands funders getting behind SMEs
2014 can be described as a year when the pendulum is swinging for the West Midlands.
It is true that much of the growth has been driven by the JLR supply chain, but also the entrepreneurial culture of the region, which is now really starting to flourish. It is really pleasing to see that these innovative companies are securing finance from the likes of the Business Growth Fund,Mercia Fund, Midven, Finance Birmingham, Oxygen Accelerator, and others. it is great to be a part of all of this.
The power of all of this can be seen from the high value sale of Delcam Plc a worldwide 3D software business, principally for the manufacturing industry. It is a great example of how a local business, with good stewardship, can scale into a global business and maintain its market leadership, for the benefit of the region. Well done to Peter Miles and the team, you are to be congratulated.
Nigel Bacon
Secantor CEO
www.secantor.co.uk
It is true that much of the growth has been driven by the JLR supply chain, but also the entrepreneurial culture of the region, which is now really starting to flourish. It is really pleasing to see that these innovative companies are securing finance from the likes of the Business Growth Fund,Mercia Fund, Midven, Finance Birmingham, Oxygen Accelerator, and others. it is great to be a part of all of this.
The power of all of this can be seen from the high value sale of Delcam Plc a worldwide 3D software business, principally for the manufacturing industry. It is a great example of how a local business, with good stewardship, can scale into a global business and maintain its market leadership, for the benefit of the region. Well done to Peter Miles and the team, you are to be congratulated.
Nigel Bacon
Secantor CEO
www.secantor.co.uk
Friday, 6 June 2014
Secantor Supports Equity Investments
As we come to the end of our financial year it is very gratifying to see the number of SMEs where we have helped raise equity funds. From small business angel investments through to organisations such as Oxygen Accelerator www.oxygenaccelerator.com up to the £4m investment that the Business Growth Fund www.businessgrowthfund.co.uk made into Palmer Hargreaves www.palmerhargreaves.com .
We are delivering ongoing support to the SME community...help your business to grow.
www.secantor.co.uk
We are delivering ongoing support to the SME community...help your business to grow.
www.secantor.co.uk
Friday, 20 December 2013
Secantor helps Palmer Hargreaves secure £4m of development capital from the Business Growth Fund
We are delighted to support Andrew Clift, Randy Weeks and all the team at PH to secure £4m of development capital from the Business Growth Fund. http://palmerhargreaves.com/news/palmer-hargreaves-announces-4m-funding-injection-from-bgf .
Well done to John Dernie of Secantor.
Any SMEs wishing to learn more about how to secure development capital should contact us on 07887 826824
Nigel Bacon
CEO
Secantor
www.secantor.co.uk
Well done to John Dernie of Secantor.
Any SMEs wishing to learn more about how to secure development capital should contact us on 07887 826824
Nigel Bacon
CEO
Secantor
www.secantor.co.uk
Sunday, 19 February 2012
How Secantor helps businesses obtain funding
Secantor helps businesses of all sizes up to £100m turnover being the upper of the medium sized business spectrum to obtain funding whether it be debt or equity, or the correct balance of both, to obtain the optimum cost of capital when balanced against risk.
Secantor starts by helping SME organisations to define their strategic direction and to properly articulate the strategy into a business plan to attract funding. This is not a "sterile document" but a way of looking at the future which will become embeded in the organisation and continually reviewed and refined.
The difference with Secantor is that we provide an ongoing role as part of the mangement team acting in the capacity of a finance director. This is an extremely cost effective way of obtaining professional input to a mangement team. In addition, the banks and equity funders, with whom we have great relationships, understand that we will be "staying the course" so we will be there to help the organisation to deliver operational success on the back of the strategy. We are therefore very different from consultants who might come in to do a one off piece of work and who do not necessarily have the vested interest of ensuring that long term success is delivered.
Forecasting is often a pre-requisite for a funding application. However, there is far less value in one off forecasting than there is in continual rolling forecasts, where management are able to demonstrate their expertise and give comfort to stakeholders that they are balancing the risk/reward model in an optimal way. Of course nothing ever goes to plan, and there will always be externalities that were not known about, however rolling forecasts give great comfort that management really understand the basic drivers of the business and that they properly understand and are working on the limiting factors. There is a change occuring within the banks where instead of requesting information they are focussing on the quality of their customers' finance function and ensuring that the propoer processes and systems are in place to deliver business intelligence for stakeholders.
As an organisation expands the proper integration of the finance function into the business as a source of business intelligence is essential to attracting finance and giving attracting the support of existing and future stakeholders.
Secantor specialises in converting a finance function from one that is merely compliant (or perhaps not!) to one that quickly becomes a true business partner and is valued by the rest of the organisation.
Secantor starts by helping SME organisations to define their strategic direction and to properly articulate the strategy into a business plan to attract funding. This is not a "sterile document" but a way of looking at the future which will become embeded in the organisation and continually reviewed and refined.
The difference with Secantor is that we provide an ongoing role as part of the mangement team acting in the capacity of a finance director. This is an extremely cost effective way of obtaining professional input to a mangement team. In addition, the banks and equity funders, with whom we have great relationships, understand that we will be "staying the course" so we will be there to help the organisation to deliver operational success on the back of the strategy. We are therefore very different from consultants who might come in to do a one off piece of work and who do not necessarily have the vested interest of ensuring that long term success is delivered.
Forecasting is often a pre-requisite for a funding application. However, there is far less value in one off forecasting than there is in continual rolling forecasts, where management are able to demonstrate their expertise and give comfort to stakeholders that they are balancing the risk/reward model in an optimal way. Of course nothing ever goes to plan, and there will always be externalities that were not known about, however rolling forecasts give great comfort that management really understand the basic drivers of the business and that they properly understand and are working on the limiting factors. There is a change occuring within the banks where instead of requesting information they are focussing on the quality of their customers' finance function and ensuring that the propoer processes and systems are in place to deliver business intelligence for stakeholders.
As an organisation expands the proper integration of the finance function into the business as a source of business intelligence is essential to attracting finance and giving attracting the support of existing and future stakeholders.
Secantor specialises in converting a finance function from one that is merely compliant (or perhaps not!) to one that quickly becomes a true business partner and is valued by the rest of the organisation.
Saturday, 8 October 2011
The British Growth Fund
I see the British Growth Fund has recenty made its first investment http://www.businessgrowthfund.co.uk/news/entry/bgf-makes-first-investment-in-young-entrepreneur
£4.2m..is this the old Investors in Industry reborn...lets hope so!
Subscribe to:
Posts (Atom)