Looking back at 2014 and ahead to 2015

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I started this blog in the second quarter of the year, with a blogpost titled First quarter optimism and while there has been cause for some optimism in the economy, I believe that 2015 should be approached with an element of caution.

There is already talk of stagnation in the global economy and falling exports in the Eurozone, and this is likely to have a knock-on effect to the UK over the coming months. Much has been said about interest rate rises but Mark Carney is yet to give a firm indication of when this could be. Nevertheless, it’s unlikely that anything will be done in this area until after the election in May. The looming election is likely to stifle activity in the short term and this is reflective of early house price predictions for the year, with Halifax estimating moderate growth of around 3% to 5% in comparison to c10% price growth this year.

Looking back at 2014 highlights a number of economic developments but, more specifically, there have been a number of notable announcements in SME lending.

Mandated bank referrals
In August, I wrote about bank referrals being a welcome move for SMEs caught in a credit catch-22 and my thoughts on the Small Business Enterprise and Employment Bill – introduced as part of the Queen’s Speech – were documented in the media at the time.

The Bill itself is still making its way through Parliament but I’m confident that – if passed – the measures proposed will help to expand the options available to SMEs. It is, currently, however, still months from receiving Royal Assent.

‘Alternative’ funding
In July, I talked of the term ‘alternative funding’ being out-dated. This is a subject I’m passionate about and for the thousands of small and medium sized enterprises we speak to, invoice finance, is a more appropriate solution than bank-lending.

The pitfalls of self-funding
Research conducted by our Market Insight team earlier in the year highlighted a rising trend of entrepreneurs and small business owners self-funding or using funds from family and friends to fuel their enterprises. And with bank lending continuing to contract, in June, I addressed this issue and asked whether self-funding is sustainable for a business.

Developments at Bibby Financial Services
In the second quarter of the year, we launched a TV advertising campaign on Sky to promote our services to a wider audience becoming the first independent invoice finance provider to advertise on national television for many years. Reaction to the campaign has been positive and I’m confident that it has helped raise awareness of both Bibby Financial Services, and invoice finance more broadly.

Record month for Bibby Financial Services
Throughout the year, new business levels at Bibby Financial Services have increased month-on-month, culminating in our best ever month in relation to sales performance, in July.  We followed this up with a cracking August and great performances in September and October. I’m anticipating a good month in November too!

I’ll continue to update the blog into 2015 to keep you up to date with changes at Bibby Financial Service and to offer my views on market developments. In the meantime, feel free to get in touch with my team if you have any questions regarding our services.

David Postings

About David Postings

David Postings is the UK Chief Executive Officer for Bibby Financial Services following his appointment in April 2012. David is an experienced senior executive with over 35 years’ experience in financial services. You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.

David Postings looks back at the first half of 2014

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There was a noticeable upturn in the economy during the first half of 2014, however, it now seems likely that growth will start to slow over the coming months. The Bank of England has already indicated that it plans to raise interest rates early next year and this will undoubtedly affect growth in the UK as will the tightening of mortgage lending processes and criteria.

We’ve noticed that despite a positive outlook, the market has remained challenging for many businesses. The first half of the year, was a busy period for my team at Bibby Financial Services and we have continued to grow both in the UK and globally. We have seen new business levels increase month-on-month in the UK, culminating in our best ever month in relation to sales performance.

Expanding our proposition

At the beginning of the year we announced a significant expansion of our leasing division, this saw us open a new office and recruit a new team to complement the efforts of our existing team, which had performed incredibly well over the past 18 months.

Expanding our customer proposition and expertise more broadly supports our overall aim of becoming the business funder of choice and leasing is now an important part of our ambition.

Construction Finance

We celebrated our 10th year of construction finance in February with the appointment of a new managing director, Helen Wheeler, and since this time our team has performed exceptionally well.  In fact, in the first half of the year, monthly sales numbers in construction doubled when compared with the same period in 2013 – a great achievement.

In the second quarter of the year, we launched a successful TV advertising campaign on Sky which helped to promote alternative finance to a wider audience. The campaign meant that we were the first independent invoice finance provider to advertise on national television for many years. Reaction to the campaign has been positive and I’m confident that it has helped raise awareness of both Bibby Financial Services, and invoice finance more broadly.

Expanding our teams

Our UK employee numbers have grown to 720 as at June and throughout the business we have continued our recruiting programme, appointing highly experienced industry experts in a variety of roles. Ian Lomas joined our executive team from Lloyds Commercial Finance as Niche Products Director in May and in June, Kevin Craven joined to head-up our Corporate Finance team.  Also in June, Gary Davies was appointed as Regional Sales Director for the South – a region of significant focus for us over the remainder of the year.

Annual client turnover handled has reached £4.9bn in the UK, with global client numbers now approaching 10,000. While we have grown, we’ve continued to put our clients at the heart of our strategy and we are now over half way through a multi-year investment in a new core operating platform, designed to enhance our customer experience.

In the first half of the year we made a number of changes to our business and have built firm foundations for the remainder of the year and further into the future. I’m confident that this preparation will bear fruit for us over the coming months.

I look forward to reporting further successes throughout the remainder of 2014.

David Postings

UK CEO, Bibby Financial Services

About David Postings

David Postings is the UK Chief Executive Officer for Bibby Financial Services following his appointment in April 2012. David is an experienced senior executive with over 35 years’ experience in financial services. David has extensive knowledge of the commercial finance landscape.

You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.

David Postings: Is self-funding sustainable for businesses?

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Bibby Financial Services recently commissioned a study of 1,000 SME owners on a range of topics, including how they choose fund their businesses. When I saw the results, I was surprised to find that an increasing number of them were self-funding. In fact, self-funding has increased by 18 per cent since the start of the 2014.

It is now the most popular form of funding, with 44 per cent of businesses surveyed using their own savings or borrowed money from friends or family.

Our findings featured in the Daily Telegraph on 24 June and I was encouraged to see that it opened up a discussion in the business community about the benefits and pitfalls of self-funding, over using an external source of finance, such as a loan, overdraft or invoice finance.

Why the increase?

Six months ago only a quarter (26 per cent) of business owners were using personal savings sowhy has there been such a huge rise in such a short time period of time?

Widespread reports of economic recovery and business confidence could have had something to do with this. As optimism and sales increase, small businesses have started to consider using personal savings or profit to finance future business. In the short-term, this may seem like a good idea and a way to increase profit margins by reducing costs, however, it’s ultimately unsustainable.

Clients we have spoken with who self-funded before taking on our services talk of a severe lack of working capital; of increasing orders but an innate inability to fulfil demand. Some have even told us of having to delay payment of staff wages until large customers paid overdue invoices. This surely isn’t sustainable.

So for start-up and early stage businesses, this may seem quick and convenient but as a business model, self-funding will only ever offer limitations in the long-run.

Traditional lending channels and other sources of funding

On top of a more positive economic outlook, many banks continue their reluctance to lend to businesses that need it most and – in some cases – this has forced owners to think that self-funding is their only option. But there’s a myriad of funding choices available – not only through traditional lending channels but also through invoice financiers such as Bibby Financial Services. There are options such as leasing, which can help businesses who need to purchase expensive equipment or machinery.

We want to raise awareness of the different funding options available to SMEs so that self-funding businesses do so out of choice and not necessity.

I’ll continue to monitor this trend over the coming months.

Thanks for reading.

David Postings

UK CEO, Bibby Financial Services

About David Postings

David Postings is the UK Chief Executive Officer for Bibby Financial Services following his appointment in April 2012. David is an experienced senior executive with over 35 years’ experience in financial services. David has extensive knowledge of the commercial finance landscape.

You can read more about David Postings and his position at Bibby Financial Services in the About Me Section.