Friday, 20 June 2014

Become part of the Secantor community on our Linkedin page

Why not become part of the Secantor community and join us on our LinkedIn company page. Share views on SMEs and the type of help and support required to grow their businesses.

The changing world of funding part 1

The striking feature of bank lending over the past few years has been the increase in asset backed lending and the decline in overdraft lending. Arguably, this has not necessarily been to the benefit of the customer who perceives overdraft facilities as flexible, and easy to use. Of course, on of the key reasons for the decline in overdraft lending has been the decline in the security available on overdrafts as a fixed charge over book debts (often the major realisable asset in a business) is no longer available.
Of course there is an argument to say that asset backed lending, particularly in the form of invoice discounting or invoice factoring, is appropriate for growing businesses. Whilst there will be a lending cap, such a facility enables the business to attract more funding as its turnover grows and as its debtor book (outstanding sales invoices) grows. Of course, the opposite is also true in that a decline in turnover will lead to a decline in funding. You may say that is not relevant if you have a young growing business, however, problems can arise if there are temporary dips in trade which may lead to short term losses that require funding, and asset backed lending can be seen as inflexible in such circumstances.
I the late 80's there were a number of American banks that entered the UK market who were not only prepared to fund debtors (at 70% - 90%) but also stock, commonly at around 50%. There were, and still are, a number of issues that surround the funding of stock. Some of the key issues are whether the business actually has title to the stock, since suppliers often have retention of title ROT clauses in their terms and conditions of sale. What these provide for is that the goods supplied remain theirs until such time as they are paid for. Often when one looks at the make up of stock within a business a large part of the raw material stocks will be covered by ROT clauses and these will be eliminated in a funders calculation of what they may be prepared to lend. Another key issue for a lending against stock is its likely realisable value in the event of a forced sale being required. With debtors where the contract has completed, but for payment, realisations should be high in the event of a business failing, since legally the customers would have no reasons for non-payment. However, the situation is very different in relation to stocks where any attempt to shift large quantities of finished goods will often require very significant discounts to be given to customers or other buyers of goods.
Before a business approaches a funder it is very important to understand the "art of the possible" and what is the appropriate funding mix (debt/equity) that is right for your business. Watch out for part 2 where we will discuss this further.

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

Sunday, 15 June 2014

Secantor partners with Fleet Innovations

At Secantor we are not about selling intellectual property we are about knowledge transfer to enable businesses to fulfil their true potential. Much of this comes from our highly experienced and technically accredited people. However, part of it is about understanding some of the latest products that are in the market place that can help our clients become more efficient. An example of this is the PEAK mileage capture product from Fleet Innovations .  Read how you can use GPS technology to take the strain out of mileage expense claims.

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

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  up to the £4m investment that the Business Growth Fund  made into Palmer Hargreaves .

We are delivering ongoing support to the SME your business to grow.

Informed Business Decisions - at the heart of what we do

The intensively competitive marketplace today demands a level and quality of performance measurement unlike any that ever existed. In the not too distant past, making money and winning at business was much easier: Companies could establish a competitive advantage quite easily and keep it for a very long time; market strength was virtually unassailable; customers were much less demanding; and leaders could manage relatively effectively with good-enough strategies and mediocre execution. but today, "good enough" is not good enough.

With thanks to Dean Spitzer

Secantor - supporting businesses to make informed decisions