SME data sharing


Although there are an increasing number of funding options available for SMEs in the UK, the reality is that business lending remains highly concentrated and that many small businesses aren’t aware of the non-bank options available to them.

Indeed, in its Small Business Finance Markets report published earlier this year, the British Business Bank conceded: “whilst levels of awareness have improved, in particular for newer types of finance, it is striking that over half of UK smaller businesses still go only to their bank and do not shop around for finance.”

There’s also evidence to suggest that many SMEs rejected for finance, don’t continue their search, assuming that a “computer says no” answer from a traditional lender is the end of the road.

The basis for data sharing
Several organisations have called for greater data sharing, including the Office of Fair Trading and the Competition Commission, which both suggested that a lack of information about the creditworthiness of SMEs has been a major barrier to competition in the SME funding market.

For these reasons, new rules that came into force on 1st April  2016 were announced with the aim of improving the provision of finance by enabling the sharing of data between funding providers.

The Government itself said that its data sharing scheme would “make it easier for new challenger banks and alternative finance providers to check credit worthiness of potential business customers” to improve the chances of them being able to provide finance to SMEs.

Based on the assumption that this data is lacking, the rationale stacks-up. However, in my view a lack of credit data was never the primary issue.

Just as you can’t judge a book by its cover, you can’t judge an SME by its credit score alone and funders naturally prefer to make decisions based on source data and their own risk assessment – not those provided by banks or Credit Reference Agencies (CRAs).

But even before the application stage is considered, alternative funders need the opportunity to make such decisions and this is where Government Policy is welcome.

The announcement in this year’s Budget to designate Bizfintech, Funding Options and Funding Xchange as finance platforms under the SME Finance Platforms regulations is a good example of Policy that will help to level the playing field between the established high street banks and the specialist capabilities of alternative funders.

The designated platforms will match bank rejected SME applicants with alternative funders – in theory increasing the chances of SMEs being directed towards a funder who can help. I hope that they act impartially and that this doesn’t just enable new “closed shops” to develop.

In my view, the Government should concentrate its efforts on getting this referral scheme up and running fairly before turning its attention to the provision of data between funders and CRAs.

While it’s encouraging to see Policy towards SME funding coming to the fore, it’s important that underlying challenges are tackled – such as the lasting notion among many SMEs that bank lending is the first and only port of call in helping businesses to access the finance they need to grow.

Bibby beats banks to top factoring table for SME funding


Earlier this month, the business finance publication, Business Money, published its annual receivables review league table, showing Bibby Financial Services as the market leader in relation to factoring assignments for 2015.

What this means is that we funded more debt than any other Factoring provider, freeing up our clients’ cashflow and helping them to grow.

We were also ranked second in terms of client numbers, seeing growth during a time where most other invoice financiers in the top ten saw a decline in the number of businesses they support.

It’s been widely reported that the landscape for SME finance has changed significantly since the end of the financial crisis. Asset based finance providers have taken on a bigger role in the funding of SMEs as the banks have tended to retreat from the market, due to tighter liquidity and capital requirements imposed following the financial downturn.

As a funder with a rich history of financing SMEs over 34 years and as part of the 200-year-old Bibby Line Group, it’s often been said that we have the expertise and financial backing to compete with bank-owned invoice financiers. But what Business Money’s receivables review reveals is significant. Not only are we competing with the banks’ invoice finance arms, we’re the first non-bank funder to lead the industry for a generation.

A relationship-based approach to funding

Throughout 2015, we continued to operate alongside a small band of established financiers that were able to grow their funding support in the face of new, online competition. We take a relationship-based approach to funding and – while we continue to invest in technology to enhance the way in which our clients can access the funding we provide – the service we offer is based on the relationships we have with the businesses we support.

We take a human approach to assessing risk and work hand-in-hand with our clients and intermediary partners to ensure that they have access to local decision makers and relationship management teams. In my view, it’s this that sets us apart from other funders in this space and is the reason for our continued success in the face of new competition.

While we have long been associated with funding smaller SMEs, in recent years – through the expansion of our product portfolio and formation of our Corporate Finance team – we now support businesses of all shapes and sizes across more than 300 industry sectors.

Examples like our funding for global car-care manufacturer, Turtle Wax; leading distributor Ripmax and more recently our support for investment company Valtegra’s acquisition of two UK-based manufacturers, demonstrate our capability in the Corporate financing space.

Today, through our growing product portfolio, including factoring, invoice discounting, lease finance and specialist finance for the construction and recruitment sectors, we support over 7,000 UK businesses. And with the launch of our new Foreign Exchange proposition to existing clients, this year, we’re continuing to bolster our support for UK PLC.

These results are testament to the commitment, drive and tenacity of our teams throughout the country, in addition to the support we continue to receive from our intermediary partners. This has taken us over 30 years and it’s been a great journey so far. I am excited about the future and for this reason, I’d like to offer a personal thank you to all our staff and partners for making this possible. Here’s to the next milestone.

Transactional funding and the art of building relationships


We’re living in a time of exciting change where the word “digital” is on many lips. A recent internal presentation from IBM declared that “digital disruption has already happened” given that Uber is the world’s largest taxi company without owning any taxis and Airbnb is probably the largest accommodation provider without owning any properties. What sets these digital services apart is that they do not seek to replace people with technology. They simply utilise technology to enable consumers and providers to connect more easily.

So, how does this digital world impact the SME finance market?  There is a common view that SME owners are happy operating digitally and received wisdom goes that digital means no people, no relationships and a world where everything is rational and transaction based. But the SMEs I speak with value the relationships they have with their funding partners and ask that they’re not kept at arm’s length through digital means.

I believe that successfully funding businesses and helping them to grow in the long term is  much more about relationships than transactional lending. For funders such as Bibby, it’s about taking a relationship-based approach to supporting our clients. Of course, this means providing innovative and up-to-date systems to support this, but it also requires personal communication – the kind a machine built solely for transactional interface simply can’t perform.

But for now it seems that many technology platforms see the trajectory as heading towards a more formalised model of online lending that involves less people.

What I sense is that when a company uses digital means to enable greater people contact in a way that is easy and simple, prospective clients will be happy to embrace the change. The implication for me is that this will not be a ‘rules based’ or ‘tick-box’ approach  but rather, it will need to embrace the flexibility of decision making based on the experience of people, facilitated by technology.

Understanding your customer and their needs is as important as ensuring the right level of funding arrives in their account at the right time. At this stage in our digital progression, we cannot lose sight of the positive role people play in guiding SMEs towards achieving their goals.

At Bibby, we are proud to be in The Sunday Times’ Best Companies to Work For as we feel this is testament to the emphasis we place on the relationships we have with each other and our clients.

For now digital-only platforms are operating in one corner of the market. If they want to move beyond transactional services they will need to provide a greater service to SMEs, a service we believe can only be enhanced through relationships between real people.

Bibby at its Best


16-26-02 BC 2016 logoLast night I attended the Sunday Times Best Companies ceremony held at Battersea Evolution in London, which was a fantastic event and a great opportunity to celebrate the UK’s leading small, medium and large businesses.

From what I witnessed last night, there really are some fantastic businesses in the UK, employing engaged and motivated teams.

What’s more, Bibby Financial Services climbed 19 places on our 2015 position and were awarded 31st place in the Best Companies to Work For – the fifth time we have placed in the top 100 in recent years.

As part of the diverse, 200-year old family-owned Bibby Line Group, we pride ourselves on working as one team. What makes these awards particularly important to me is that they are voted for by employees and based on key indicators such as leadership, charitable giving, employee well-being and professional development.

I’ve often said that attracting and retaining leading talent is critical to providing excellent service and value to our customers. Over the past year, we have heavily invested in employee wellbeing and workplace benefits to ensure that we have motivated and committed teams, willing to go the extra mile to deliver for our clients.

Last night’s award reflects this commitment to being a great place to work and our 93% customer satisfaction rating demonstrates that our efforts have been successful.

While running a business of any size is consistently challenging, it’s recognition like this that makes it all worthwhile.

It’s perhaps unsurprising that the CEO of any business would talk of that company being a great place to work, but you can read what some our teams say on our Facebook page here. You can also hear what our clients have to say about us on our website.

Additionally, if you’re interested in finding out more about opportunities at Bibby Financial Services – either in the UK or in one of the 13 other countries we operate in – visit our careers page.

SME Referral Scheme: why the wait?


In its Small Business Finance Markets report published earlier this month, the British Business Bank (BBB) found that “over half of UK smaller businesses still go only to their main bank and do not shop around for finance.”

While choices available to SMEs have increased significantly in recent years, there is still a distinct lack of awareness of the full range of funding options available among many small business owners. It’s perhaps for this reason that the Government and BBB’s mandated referral scheme drew so much attention when it was announced two years ago.

First mooted in the 2014 Budget, the Government laid out plans to consult on legislation to help SMEs that have been rejected by banks to get the financing they need. Later that year, a list of ten banks were drawn up which would be required to refer SMEs on to other funders, should they be unable to support them.

Fast forward from its announcement in August 2014 to now, and we are still waiting for the scheme to be launched. The latest delay now suggests that the scheme will launch in the latter part of the year.

There are always going to be a number challenges and barriers to overcome when looking to strike-up dialogue between different public and private sector organisations. But if both SMEs and the wider economy are to start benefiting from the scheme, this dialogue is critical.

From what we understand at this stage, the next step is for the BBB to provide the Treasury with “full advice by the spring”.

What this “full advice” actually entails remains to be seen. However, with Spring fast approaching and the need for the Treasury to review and feedback, this leaves little room for the platforms and legal processes to be fully developed, tested, improved and then finally launched any time soon.

Of course the biggest losers from this delay are SMEs. For them, the delay hinders their ability to access a wider range of financing options.

According to research on behalf of the BBB in its ‘SME Journey Towards Raising Finance’ survey in 2014, two-thirds of SMEs only go to one provider when seeking finance and almost two fifths (38%) appear to give up their search for finance after their first rejection.

With the big four banks still dominating the SME lending market, for a third of businesses that are declined funding, there is no signposting of where to look next. It is this lack of direction and compass setting that desperately needs to be fixed.

Plugging the gap

While we await a government-led referral scheme, spearheaded by the BBB, private sector organisations are stepping up to the plate to plug the gap. Just last month, we announced that we had joined Alternative Business Funding.

Since it first launched in 2014 – around the time the mandated bank referral scheme was first mooted – the ABF has received more than 30,000 visits to its website, resulting in several thousand SMEs finding the funding they need.

While the Government and BBB continue to develop the schemes proposition, it is the private sector – and a collaboration of providers right across the funding spectrum – that is stepping in to fill this void, helping SMEs to obtain the funding they need to grow.

If such collaboration between funders can be reached in order to match the needs of SMEs, it’s surely just a matter of time before the BBB led-scheme is launched.

Until this time, however, SMEs will do well to note that there are services available that are already helping small and medium sized businesses to access the finance they need to grow.