Is the Budget likely to enable the UK to engage Top Gear?


Hammond’s first and last Spring Budget delivered on 8 March doesn’t seem very small business friendly. At first blush, increasing the National Insurance contributions for self-employed to fund care might not seem anything to worry about. But in the same breath corporation tax is being reduced. So, those larger businesses that have a choice about where they base themselves pay less, but small sole traders who have less flexibility are penalised. A tax on “strivers” it would appear.

This follows his predecessor’s naked aggression towards smaller buy to let landlords. The stamp duty rises and reduction in tax breaks are also a tax on “strivers”. If you are a so-called professional landlord with 12 or more properties the rules are different. Hammond could have unwound this divisive and economy depressing position but chose to swerve it.

The UK has been drifting along in neutral for years. Given the looming Brexit negotiations we might have expected a Budget designed to accelerate growth. One that may have had us changing gear and aiming to overtake our competitors. Instead we were presented by a fairly limp, non-event that just seems to unfairly penalise hard working people. May’s government and this Budget seem a throwback to the rather uninspiring days of wet conservatism. Is Hammond Clarke’s son?

At a time where smaller businesses already have significant change to overcome – namely April’s National Living Wage increase and pension Auto-enrolment for smaller firms – last week’s Budget should have been an opportunity for Hammond, May, et al to demonstrate their commitment to boosting the economy by supporting our small businesses.

What the UK needs is help for SMEs; less red tape, more support for exports and chance for the risk takers behind SMEs to hold on to a fair share of what they create.

The Budget doesn’t do this, nor does it seem to even attempt to do this. In order for us to ride the inevitable Brexit bumps and shocks we will need a more robust economy with real growth and a sense of optimism. This must start with support for SMEs who make up the overwhelming majority of businesses in the UK.

Let’s hope that in the Autumn Budget, Hammond takes the chance to be bold and help the SME engine that drives the economy. If the Government fails to direct support in this direction again, it may find its aspirational support looking elsewhere for backing.

Efficient business. Efficient Britain.


The results of the latest SME Confidence Tracker report show that the final months of 2016 were a time for collective belt tightening and falling investment as rising costs started to take hold for many businesses in the UK.

Prior to the referendum, just one in 10 SMEs cited rising costs as their biggest challenge. In the final months of the year, this had more than doubled. As input costs rise due to a weakened pound, there are renewed fears that stagflation may be around the corner.

Economic think-tank, the National Institute of Social and Economic Research has predicted that inflation will hit 4% this year. I am doubtful that it will reach such heights, but we are undeniably in for a time of price rises. There are significant warning signs already and in December, inflation reached 1.6%, up from 1.2% in November.

This will undoubtedly affect consumer spending, impacting businesses throughout the country. As a consequence of rising input costs, many SMEs now face the conundrum of how to uphold profitability while remaining competitive with their counterparts overseas.

As prices rise, business investment is falling. Our final report for 2016 highlights the scope of this drop. In Q2, the average planned investment amongst SMEs was £101,919. This has more than halved to £49,237 for the first three months of 2017. Planned investment from manufacturing businesses fell by 150%.

Competition was also a key concern for businesses in our research. Behind rising costs, increasing competition was the greatest challenge for UK PLC.

While we await specific direction on the UK’s future relationship with the EU, now is the time for SMEs to look towards efficiency to boost competitiveness and offset cost pressure. But what is business efficiency? There is a common misconception that it means cost cutting and contraction.

What efficiency really means in the context of SMEs, however, is optimising allocated resources in the best way to operate effectively. It involves making assets work harder in order to achieve sustainable business growth. This could include reviewing supply chains, production methods or routes to market. It may also mean considering different sources of funding, overseas trade, how to improve credit control processes or using new transactional technology.

Whatever the case, as the uncertainty of economic events of the past year seep into 2017, now is a good time for businesses to reflect on what they can do better. To consider how they can put themselves in the best possible shape for the year ahead.

While the headlines continue to focus on big business, international trade agreements and the UK’s disentanglement from the EU, it’s UK SMEs that will drive the economy forward. For Theresa May and her Cabinet, amid potentially significant price rises and ‘hard-Brexit’, the mantra for 2017 should be ‘efficient business, efficient Britain’.

Read the SME Confidence Tracker in full here.

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.

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.

Warning: array_key_exists() expects parameter 2 to be array, null given in /home/sites/ on line 700 Warning: in_array() expects parameter 2 to be array, null given in /home/sites/ on line 764