We open our latest Business Finance Bulletin with the good news that business confidence levels are on the up. The latest Business Barometer report from Hitachi Capital Business Finance reveals that an increasing number of business owners are predicting improved months ahead.

Cashflow can be tight for many businesses, but particularly for start ups. Just Cashflow, the short term finance lender, has announced that alongside their new Business Account, qualifying start ups can now access their Revolving Credit Facility.

To wrap up this Bulletin, we review the latest company insolvency figures which highlight that businesses potentially in trouble continue to be protected by the various government support schemes.

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Google, Spotify, Stitcher or itunes channel.

You can read the transcript of this Bulletin below…

Business confidence is starting to return; the short-term lender Just cashflow extends supports to startups; and company insolvencies still remain low. All of this in the latest Business Finance Bulletin.

Business Finance Confidence

Let’s opened this bulletin with some good news. Hitachi Capital Business Finance, as part of their quarterly Business Barometer series, have spoken to approximately 1,300 small business owners and the resounding message is that confidence is beginning to return to the marketplace.
Let’s have a look at those businesses who say that they are predicting growth.

Well, three months ago, 26% of businesses said that they were predicting growth for their business.

Forward three months to today, that figure now stands at 36% of business owners saying that they are planning growth over the coming months. That’s a quite a big increase and that’s a big vote of confidence for the UK economy.

Let’s look at the flip side of businesses who were fearing collapse. Well, 12 months ago, the survey found that 29% of small business owners said that they were fearful that their businesses would not survive.

Now, 12 months later, that figure stands at just 7%. That’s a significant fall and just shows how much confidence is now starting to come back into the market place. But of course, it’s not all plain sailing.

I just want to make you aware of one key thing to look out for and that is growth brings its own problems, particularly in terms of cashflow. When you start growing again, particularly if you’re growing rapidly, there’s a big demand on your cash. You need to buy in stock. You need perhaps to fund the growing debtor book, all of this needs cash.

So do watch that and make sure that you are forecasting your cash flow requirements ahead to make sure that you don’t run out of funds, but overall, a really good vote of confidence for the UK economy.

Just Cashflow Supports Start Ups

Are you planning to start up a new business or you have recently started one? I’m sure you’ll agree that the one thing that can hold you back is cash or more particularly cashflow.

Poor cashflow can be a killer for any business, but for startups in particular it can be very challenging.

The short-term finance provider Just Cashflow has announced, it is now going to support qualifying startups by giving them access to their Revolving Credit Facility, which is a facility up to the amount of £10,000. This sits alongside their newly launched business account which is available via a mobile phone or a desktop app. And it does all of the things that a traditional bank account will do. You can make payments online, both in and out. You have a master debit card as well. It integrates with various software accounting packages.

So it really is a good alternative to your main high street banks and particularly of interest of course to startups, where you may be able to access this Revolving Credit Facility up to £10,000. This facility acts essentially like an overdraft limit where often times when you need to make payments out, but you haven’t got the cash in from your clients yet; it acts like a bridge between cash in and cash out a really useful facility for startups.

If you want to know more about the Revolving Credit Facility and also the new business account, just go along to the just cashflow website, which is www.just-cashflow.com. A great new service by Just Cashflow and good to see that people are out there supporting new start ups.

Company Insolvencies

Let’s take our usual monthly look at company insolvency figures. That’s a bit of a depressing topic, of course, but it’s really important that you watch this, particularly if you provide credit to your customers, by giving them 30, 60, 90 days before paying you. You really need to watch the trends going out there to make sure you don’t get caught out.

The figures as I’ve reported in previous bulletins continue to be very low, which is puzzling compared to where UK economy is at the moment in terms of the stresses out there. The latest figures have been released by the Insolvency Service for March, 2021. And in that month, they were 992 firms that went into some form of insolvency arrangement. Now compared to March, 2020, that is down 20%. And that’s the puzzle. You’ve got lots of stresses in the economy, and yet a lower number of businesses are entering into insolvency compared to March, 2020.

If you wind it back a further 12 months to March, 2019, this figure is down a further 37%. So again, a very large drop in the number of businesses going into insolvency.

But of course, the reason behind this is the level of government support, via bounce backs and the CBILs loans that were given; the furlough or the various grants. But we know all of that is now coming to an end or has come to an end. The distresses will now start to come through.

The other thing of course is the perils that come with growth. And I mentioned in the first segment, you’ve got to watch out when you grow your businesses; growth brings an increased demand for cash. And if you can’t access that, then you may get into trouble. So if you are providing credit, just keep an eye on those firms, making sure that they are financially sound.

Also if you are one of the businesses suffering financially, make sure that you take the appropriate advice. Go speak to your financial advisor, your accountant, or seek out a licensed insolvency practitioner in order to make sure that you seek out the correct advice.

Close

That’s it for this Bulletin. As ever, I hope you liked it and if you did, please, don’t forget to give it a like, a share and of course, subscribe to this channel.

So that’s it and I look forward to being with you next time In the meantime, have a profitable, successful and safe week.

Opening this Bulletin, a review of the latest Small Business Index survey from the FSB which reveals that business finance is primarily being used to supplement cashflow as opposed to investment. Will this continue in 2020?

Firms looking to export for the first time can find it challenging identifying opportunities and associated risks. To solve this problem, the trade credit insurer Euler Hermes has launched a free-to-use tool for budding exporters.

To wrap up, news from the Asset Finance sector on how 2019 volumes outstripped traditional bank lending. What assets financed saw the most growth last year?

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Spotify, Stitcher or itunes channel.

As well as being a barrier to growth, late payment has other negative knock-on implications. To open this Bulletin we take a look at the findings of a survey carried out by Xero and PayPal which reveals that the victims of late payment find themselves unable to pay their own suppliers.

One way of speeding up cashflow is to open an Invoice Discounting facility. To make it easier and to offer greater flexibility than traditional facilities, Nat West has launched its Rapid Cash service. Similar to an overdraft, Rapid Cash provides swift access to cash.

When it comes to investment for growth the FSB has found that small businesses are reluctant to do so in the current climate. Yet businesses are still borrowing but for what purpose?

If you would prefer to listen to the podcast version you can click below or download to listen to later via our Soundcloud, Spotify, Stitcher or itunes channel.

The invoice finance and asset-based lending sector is providing an increasing share of finance to UK businesses according to latest data released by UK Finance, the trade body for the finance industry.

The amount of money raised via invoice finance (a method of unlocking cash tied up in invoices) and other asset-based finance such as leasing and HP, is up 13% year-on-year. The total amount outstanding sits at just over £22 billion, which is the highest advances figure ever.

There are just over 40,000 UK business now using this form of finance, although this number has remained relatively static.

With the government focused on driving up UK exports, the exporting picture is particularly strong, with sales from clients through export invoice discounting facilities up 33% year-to-date, and export factoring up 11%.

UK Finance wants to see the government do more to encourage smaller businesses access funding via these sources. They are calling on the government to bring forward long-awaited legislation to give more smaller firms access to much-needed funding.

Many small businesses find themselves trapped by o-called ‘ban on assignment’ clauses, which are sometimes imposed by larger businesses on their smaller suppliers. This can restrict the finance options available to those supplier businesses. To address this, the UK Government is expected to bring forward revised Business Contract Terms (Assignment of Receivables) Regulations in the New Year.