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© Business Money Ltd 2006 |
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Business Money spends its life working with the business banks and invoice finance houses of Britain though for the past few months it has become clear that the small business factors are coming under increasing pressure. A number of reasons are spoken of. More flexible underwriting standards employed by the major bank operators, the absence of a risk premium on deals which are close to the edge of feasibility, others came to light and the only sensible response to this seemed to be to hold a conference. Our aim was to bring some of the challenges presently being experienced by the sector to an open forum and then look at one or two ways of addressing them, and the consequences if they were not addressed. Then we added one or two other areas such as the experiences of a similarly placed small business factor in France to provoke thought. Throughout the day I beseeched the attendees to candidly complete the appraisal forms in order that we might assess the effectiveness of each session and seek to improve upon it next time around; something of which we can speak with complete confidence as the almost unanimous verdict of all attending including our sponsors, Dancerace, was that the conference had been a huge success and had to be repeated. What clients always wanted, but were afraid to ask Fenella Barnard and Anthony Avison – Dancerace The generous sponsors of the gathering opened the day with a reminder to the small business factoring community that developments in IT permitted an ever more effective manner of running their operations, and offered an improved flow of information to customers. We also learned of measures that will ultimately compel all of us to move to electronic invoicing and of the considerable opportunities for enhancing profit that existed through this medium. Dancerace will open the batting again next year and I have a personal ambition to see the considerable benefits available from embracing the latest developments here presented in a more durable format. We have a responsibility to our sponsors here and will be working closely with them to ensure that they maximise the return on their investment. It was now time to contemplate the channels through which independent factors receive most of their business and we had a two-pronged thrust here. What a broker wants Alex Hilton-Baird – Hilton-Baird Financial Solutions Stuart Wilkinson of Factoring UK had been due to make a presentation on the subject of ‘what a broker wants’ but Stuart’s wife was hospitalised seriously ill and while Stuart was more than willing to join us and make his presentation then return to her side the only decent course of action was to release this thoroughly decent guy from any obligation. I picked up the telephone to tell him that he would make us all feel a great deal easier if he was to stay with his wife. This is a close industry and I know that everyone has them both in their thoughts. Cometh the hour, cometh the man and Alex Hilton-Baird stepped into the breach at less than 24 hours notice. Having had to follow him when he made the mother and father of all fantastic presentations in Lithuania I knew just how good he can be, nevertheless, to achieve that which he did at such short notice is worthy of the highest praise. His combined content and presentational scores in the ‘excellent’ and ‘very good’ categories both totalled 72%. His message was worth listening to as well as it is a theme that I have heard echoed in one or two places recently. His disappointment at setting up a quality lead only to find that the factor seeking to follow up with what Alex described as an ‘indifferent’ sales team is happening all too often and is maybe systematic of something which came up later in the open debate. The Internet – how and why it boosts sales Brad Liebmann – Xbridge Let’s face it Brad Liebmann arouses strong feelings, though those who love him do so because of the boost he has given to their new business acquisition. Figures largely achieved through clever and expert use of the Internet. Brad always speaks with passion and his presentation was more confident and more polished than that which we said in Prague. It was also more focused and alerted companies to the need to be professional about the manner in which they employed their brand on the Internet. Brands – the theme of the conference was picking up nicely here but I did see a few faces fall when Brad mentioned to me one or two companies that informed him they had spent £20,000 revamping their website though in Brad’s opinion the money had not been well spent. An outsider’s views – from an insider Paul Hird Paul Hird, a former senior director with Venture Finance Group and subsequently managing director of AIM capitalised Dynamic, was asked by me to present an insider’s view of the small business factoring industry from an outsider. I believe that there was method in the madness in that I just wanted to remind everybody present that good and successful small business factoring has much to do with remembering the basics. It is amazing how often, when things seem to not be going well, a quick examination of the situation can reveal that in many areas the basics are not being done very well. Paul discharged his duties beautifully and if one or two thought that it was all pretty basic stuff I hope they can return to their companies in comfort in the knowledge that everything that Paul detailed is being discharged in a 100% effective manner. It was now time for the open forum debate. This suffered from our being robbed of half an hour early in the day by delayed trains and traffic problems. In debates such as this I seek to bring out some of the issues normally placed under a mantle of reserve and this takes a little time. The debate was just beginning to get a little lively when we had to stop for lunch. This is as good a time as any to talk about the hotel. The staff were fantastic, the food both for our lunch and dinner in the evening reported elsewhere was great and the whole atmosphere was very friendly. Sadly it was clear that the fabric of the Britannia Hotel had seen much better days and was long overdue for a large dose of TLC and some refurbishment expenditure. We chose the hotel at some distance though with recommendation of a locally placed friend and favoured it because of its proximity to New Street Station and a large car park. The conference was situated in Birmingham so that it was accessible to companies all over the country and we believe that this would be a logistically satisfactory proposition for everyone. We will find somewhere else in the area for next year’s conference. Lunch over we then embarked upon a module containing two sessions; the first was aimed at reminding us how easy it is to err from the path of righteousness in control procedures and how expensive the results can be, the second was demonstrating that if all other procedures had been sound then all may not be lost. Horror Stories – how you can star in one…and foot the bill Robert Horton – Smith & Williamson Robert proceeded to give a brilliant account of a number of disaster areas; he highlighted the manner in which the accounts concerned had achieved this status and he pointed out how it all might have been avoided. The title ‘horror stories – how to star in one… and foot the bill’ could not have been more appropriate and it was interesting watching the faces as this session got underway. One or two of the cases rang one or two bells and possibly twinged one or two consciences in the place and did no damage for all that. Refining a collect-out strategy to maximise return Mark Orton – KPMG Mark has spent much of his life getting chestnuts out of the fire for invoice finance companies and it was stimulating to hear his views on formulating a strategy to recover as much money as you can. There is much more to this than just collecting out the debtors. Many a collect-out can only be achieved when a number of other areas relating to the failure of a business have been identified and then addressed and this often involved politics, the law and to a high 90% region although the degree to which the factor makes recovery after costs and a number of other issues have been taken into account is more difficult to identify. The tea followed the two ‘disaster area’ modules; presentations which some deemed relevant, one or two maybe did not but that depends maybe upon how you view the industry and how those in it propose going forward. Factoring small business in France Sylvain Loisueau and Pascal Lang - Euro Sales Finance It is all too easy to believe that we are all alone in the world of factoring and this is far from the case. Sylvain and Pascal made a first class presentation on life as a small business factor in France; one holding around 3% of the total market. A number of similarities in challenge and opportunity came to light though I noticed that much of the money they put out appears to be at margins of 4%-6% over cost of funds and I thought I detected one or two delegates going a little green with envy. The English of our two visitors was excellent, the amount of research undertaken to make the delivery considerable and the presentation was first class. Enhancing the value, efficiency and profitability of your business through training Kate Sharp – FDA One of the issues which had come out during the open forum debate was the problem of recruiting and keeping good staff. The old conundrum regarding training staff had already been discussed – if you train them they will go, but if you don’t train them they will stay. Kate started her delivery slowly and deceptively because over a period of time she gradually built up to demonstrate to the gathering just how feeble the industry’s support of some top training initiatives can be. Training is an investment, one which can enhance profits, save losses and improve a company’s image and yet the willingness of many in this sector to support the FDA’s training seminars left Kate feeling frustrated. Should the industry fall under the regulatory arm of the FSA, this is an institution that is obsessed with qualifications which may be excessive, but which insists on high levels of training where many would say it is absolutely correct. A great session, powerful material, well presented; I was left with the impression that maybe a greater investment in training by many of the small business factors would alleviate some of the complaints which we hear. Many of the issues had interwoven nicely throughout the day and one that Brad Liebmann had picked up in his delivery, ‘the value of the brand’, was next to come under the spotlight. The value of your brand – it can be priceless Mike Denny – Roundel Mike is an old hand in the world of promoting, sustaining the momentum of, and polishing brands. A man with a track record with the likes of City Bank, Merrill Lynch and HSBC should be listened to and in a relaxed yet hugely effective delivery he reminded those present that proper use of a brand can add huge value to a business, can help retain customers and help promote sales. I guess the most telling comment on this one came from Mark O’Neil of IGF, when he said: “An excellent end to a very good day – could have turned into a longer session with more specifics. Thank you”. I guess this summed up Mike’s delivery very well. Summary The conference had 17 factors in attendance. One or two more were precluded because they were either very busy – small factors have to make do with very limited personnel resource – and it must be confessed that the counterattraction of Royal Ascot may have won one or two more. The day was designed to make our small business factors aware of what is possible and what some of them must do to ensure that they are still around and making good profits in a few years’ time. I am passionately committed to the small business factoring sector and its independent providers though it is interesting that one of the most powerful contributions to the conference came from the team from Lloyds TSB. This is of course where many of the independents draw their funding. At the end of the day nothing new emerged, if there was a recurring message it was that attention to detail, good management, recruiting good staff and training them well will pay dividends. Editor
Read the review of the Great Central Business Money Commercial Finance Dinner that followed the conference.
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