Business Bureau Free Articles

Leumi ABL acquires Coface client portfolio

Leumi ABL Limited, the asset-based lending subsidiary of Bank Leumi (UK) plc, has acquired a portfolio of clients from Coface. Commenting on the acquisition, Paul Hird, of Leumi ABL, said: “This is another exciting development for the Leumi ABL team and builds on our very successful growth to date. We very much look forward to welcoming the Coface clients who will be joining us.” Phil Woodward, managing director of Leumi ABL, added: “This deal continues our growth strategy and follows our purchase two years ago of the Charterhouse Commercial Finance client book. Since launching Leumi ABL five years ago, we’re proud to have built a strong reputation in the mid tier deal making arena. We are very pleased to be able to extend our offering to assist the growth of these additional clients, whilst offering the flexibility, speedy decision making and personal approach for which we are known. As with our existing clients, Leumi ABL’s full asset-based lending capability will be available to support these new clients as their business needs evolve.” Martin Risman, formerly of Coface, has recently joined Leumi ABL as regional sales director where his new role will involve overseeing the successful integration of the new clients within the Leumi ABL team and providing ongoing client relationship management from the Brighton-based head office. Xavier Denecker, managing director of Coface in the UK and Ireland, said: "Coface is discontinuing its receivables finance activity in the UK to focus on its core business, trade credit insurance. We are confident that our receivables finance clients will find at Leumi ABL the business understanding and quality of service they appreciated at Coface. We look forward to developing with Leumi ABL a strong partnership between receivables finance and insurance."

CBI survey highlights firms` gloomy outlook

Manufacturers reported their biggest drop in confidence for more than two years yesterday as the eurozone crisis continues to weakens demand. The CBI Industrial Trends Survey showed that manufacturers` expectations for exports and the general business situation fell at its sharpest rate since the height of the recession in Q2 2009. Orders and output are expected to fall over the next quarter, following modest rises in domestic demand and production, with exports expected to show their first fall since October 2009. The survey adds to worries that the economy is grinding to a halt and is a blow to the Chancellor`s plans to rebalance the economy towards more exports. Manufacturers now expect to shed jobs, having increased employment over the last quarter.

Banks’ lack of common sense is slowing growth.

A survey by Shawbrook Bank, a new specialist savings and lending bank, has revealed that 89 per cent of small and medium size enterprises (SMEs) in the UK believe the country’s banks fail to use common sense when they make decisions about business loan applications. The research shows that a significant number of SMEs feel banks are failing to make it easy for them to borrow, despite continued calls for banks to lend more freely to small businesses to help them grow. There is widespread frustration among SMEs with the way they are dealt with by banks, despite their appetite to borrow. Almost half of SMEs questioned feel banks are too bureaucratic when dealing with small businesses, and only 6 per cent of SMEs questioned feel confident that banks are clear and transparent in their dealings with small business customers. The survey of over 800 SMEs was commissioned by Shawbrook Bank, a specialist in savings and lending, which aims to make it easier and more straightforward for credit-worthy SMEs to borrow.

Did the chancellor do enough in his Autumn Statement to support SMEs?

The principles of what wasannounced seem positive, however it will be interesting to see how they work inpractice.

The proposed National LoanGuarantee Scheme that is supposed to offer SMEs access to cheaper loans justseems to be an extension of the current EFG Loan scheme. The EFG has proveddifficult to obtain because of the lack of knowledge of exactly who wouldqualify, along with a reticence on behalf of the Banks to provide them. This is borne out by the fact that the Banksare lagging behind on their “Project Merlin” lending targets.

Tax Relief on individualsinvesting in a new business starting in April 2012.

In principle a good idea, howeverthe current economic situation has been with us since 2008/9 so this seems tobe a case of too little too late, particularly as it will not be retrospective.

People wanting to start and investin their own business need to be sure that they will have the support to ensurethe business will survive. Access to finance, along with certain tax breaks fortaking on staff or using their own money to support themselves in the earlystages of the new business is vital. It will be interesting to see if theseproposals actually work.

HAPPY CHRISTMAS.

I would like to wish all my customers and introducers a very Happy Christmas, and a fruitful New Year.

The UK needs alternative solutions for SME funding

The last few years have been a rocky road for the UK’s banks. UK SMEs have felt the effects of the stumbles in the banking industry more than most, with bank lending to the SME sector especially restrained in an economic environment that has heightened the need for working capital to support day to day business.

However, although generally failing to meet the credit needs of SMEs the big 4 UK banks (Lloyds Banking Group, Royal Bank of Scotland, Barclays and HSBC still manage to retain nearly 80% of all SME accounts.

The banks’ promises under Project Merlin are still not being met and the Enterprise Finance Guarantee scheme, an initiative to aid loans to small business, shows a 40% decline in lending year on year. The credit crisis looks set to enter round two, with lending likely to be squeezed even further. Interestingly, the proportion of lending through various means of asset based finance has apparently risen, with the Asset Based Finance Association specifically highlighting the growth of invoice finance over the past year.

The reality is that, as far as the SME sector is concerned, the UK banking industry is running fast in the same spot - and has been for the past few years. The leading UK banks are not incentivized to lend to SMEs’ and the situation going forward is not likely to get better, with changes to the banking system and bank capital requirements proposed under the Vickers Report and the Basel III directive, only serving to further dis-incentivize lending to SMEs.

The latest proposals from the Government for Credit Easing will not resolve the issue; SMEs do not need to borrow nor can they afford to borrow the hundreds of thousands that make SME bonds cost effective. The purchasing of securitized SME loan portfolio’s by the government presents the same moral hazard that got our economy into this mess in the first place.

UK businesses need to take matters into their own hands, take control of the situation they face and embrace alternative funding solutions. The plight of SMEs can be addressed, but requires their cooperation. Barriers to change service provider are not as high as some may think, and the benefits will quickly materialize. The 4 million small and medium size businesses in this country are critical to stimulating growth in our economy and we need them, as consumers, to drive change to get this country going again.

New innovation in financial services

One significant barrier to improving the funding problem is the Governments and Medias’ focus on ‘fixing the banking industry’. The scope should be a lot broader – on how the financial services sector as a whole can work more effectively to meet business and individual consumer needs.

I believe that non-banking financial firms, those that do not currently compete in the funding arena, can add considerable value. There is a demand to access the SME market from hedge funds, family offices, alternative investment advisors and private banks. These firms can deliver more competitive funding rates for business while still turning a decent profit. They are very keen to diversify into SME exposures.

The issue for non-banks is one of sourcing. Sourcing and relationship management is a heavy cost even to existing participants in the industry making client acquisition far from easy.

A number of new innovative products and services are coming to market to help address the pain felt by SMEs. These services seek to positively disrupt the industry business model by providing more power to and better meeting the needs of the consumer. However, with this first wave of innovation, imperfections are inherent – nothing is quite fulfilling objectives.

Invoice financing in its current guise accounts for less than 5% of business funding in the UK; a ludicrously low percentage considering the relative benefits of invoice finance to traditional debt finance such as loans and overdrafts.

No interest to pay that further impacts cash flow, more effective use of balance sheet assets, inherent security for funders (invoice buyers) thus nurturing more demand, and generally improved financials and ratios for the business borrower (invoice seller). The barrier has always been the complexity of the delivered service, the unnecessarily high cost and the lack of awareness of invoice finance.

Despite Project Merlin, the number of small businesses taking on finance falls

The number of small businesses that have used a bank overdraft or loan has fallen in the past two years, according to a new member survey by the Federation of Small Businesses (FSB), even though Project Merlin was supposed to increase lending.

In a poll of more than 11,000 FSB members, the survey found that only 35% of members used an overdraft in 2011, 11% a secured bank loan and 7% an unsecured bank loan. This is a drop of -8, -3 and -4 per cent respectively since 2009.

Unpaid invoices are costing the UK economy �1.4 trillion per year

New research has found that 13 per cent of invoices issued by growing UK businesses remain unpaid every year. That is roughly 69 invoices per company per year with a potential revenue loss of �509,502 per small business per year, new research by Tradeshift finds.

Reasons for non-payment

When asked about the reasons for non-payment of invoices, 34 per cent put slow payers at the top of the list, followed by companies going out of business (24 per cent), disputes over work (19 per cent), cash flow problems (11 per cent) and administration (9 per cent).

And it isn’t just unpaid invoices that cause problems for small businesses, it is invoices that are paid late too. The survey found that 41% of small businesses have payment terms of 30 or 60 days, but 39% of all invoices issued
by small businesses every single year are not paid on time.

That is 206 invoices per business per year and 527 million small business invoices in total across the UK that need to be chased.

Administrative burden

All these unpaid or late invoices cause an immense administrative burden on small businesses. An estimated 25 employee hours per week are spent managing, processing and chasing invoices in UK small businesses, equivalent to over three whole days per week.

Small businesses estimate that around 75% of this time (a total of 19 employee hours per week) could be saved if all invoices were automatically managed, processed and chased online.

That is because small businesses say that 32 per cent of all invoices are still received through the post every year, only 28 per cent of small businesses said they handle all their invoices online.

Consequences

The business impact for small businesses and the UK economy as a whole caused by all this has serious consequences . When asked, 27 per cent of small business financial directors and business owners admitted that cash flow problems caused by unpaid invoices could force them to lay off staff.

In addition, 20 per cent said they would have to turn down business or take out a business loan. 16 per cent of small businesses said they never have cash flow problems.