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January 22, 2020

Optimum Finance invests to improve financial processes for UK SMEs

Fast growth firm Optimum Finance is leading the UK invoice finance market by incorporating cutting edge technological solutions into its client approvals, onboarding process and financial reporting systems.

Optimum Finance, which was established in 2017, has reviewed the market to identify suppliers which can provide the latest data-driven technological solutions to improve client experience. Following a competitive selection process Validis and AccountScore were chosen by Optimum Finance as part of its ongoing investment strategy in fintech solutions.

The industry-first partnership will mean that Optimum Finance can remove manual, administrative elements of the underwriting process when taking on new customers. Business owners will be able to receive formal funding offers almost immediately through the use of Open Banking and Open Accounting functionality which will automate the transfer of financial records from the customer to the Optimum Finance team.
The majority of UK SMEs now use online accounting software and Validis has developed an award-winning Open Accounting platform called DataShare which enables businesses to grant permissions and access to its accounting records instead of manual collation and transfer of documents.

Optimum Finance, once in receipt of online access to a prospective customer’s accounting records, can then make immediate and accurate lending decisions and ensure robust compliance through automated risk assessments.

Validis partner business AccountScore operates as part of this process by enabling businesses via its proprietary Open Banking technology to grant consents to business account bank transaction data thus removing the need to supply bank statements manually.

This holistic solution will radically enhance the sign-up process for new clients, improve the quality and speed at which data can be supplied to the underwriting team and reduce risk of fraudulent applications.
Commenting on the partnership, CEO of Optimum Finance, Richard Pepler, said: “We’re committed to investing in technology which improves the way the industry operates which is still very paper-based. As a fintech-first business we know the market will benefit from increased digitisation of previously manual operations.

“This automation of our onboarding process will also be extended in the near future to the monthly processes of invoice submission and cash received reports which customers need to be able to ensure robust financial health and to access agreed funding to ensure a healthy cash flow position.

“Our vision is to use cutting edge technology to drive the industry forward; this means we can focus our time on developing our customer relationships and on providing value-added advisory services which is where we are unique in the invoice finance market.”

Validis CRO, Jake Niarchos said: “Optimum Finance is leading the way when it comes to utilising technology within the lending lifecycle. We are excited to work with Optimum Finance in order to provide the most seamless lending journey possible for its clients, while ensuring they have all the right data points available to make fast, accurate and safe lending decisions.”

AccountScore CEO Emma Steeley said: “We are delighted that Optimum Finance has chosen to embrace Open Banking through AccountScore’s market leading solution. Optimum Finance’s rapid adoption of the most cutting-edge fintech products has been clear for all to see and we’re delighted to be part of their story. We are very much looking forward to working with the Optimum Finance team and by extension enabling more SMEs to reach their full potential.”

January 22, 2020

Regulation and compliance to become business critical in 2020

In 2020, businesses can expect a range of regulations to be enforced, including the delayed Strong Customer Authentication (SCA) requirement of the Second Payment Services Directive (PSD2). This requires financial service providers to provide two layers of authentication on high value purchases over £28 – aiming to improve the security of online transactions and reduce fraud.

Many game-changing regulations have come into force in the past two years. In the age of GDPR, businesses face significant ramifications for non-compliance such as financial penalties and reputational risk. This year presents an opportunity for firms to prioritise a proactive risk and compliance policy in order to succeed.

Government regulation operates around universally applicable criteria. Compliance, however, such as the FIDO 2.0 protocol, is based on ensuring firms adhere to the highest standards of authentication. Alongside the speed of innovation and digital disruption, driven by fast-changing consumer trends, the regulatory and compliance landscape is having to evolve quickly to keep consumers protected.

John Spencer, CPO at authentication company Veridium, comments that the competing pressures of companies trying to enhance the customer experience, whilst adhering to regulations and the best possible standards of security, have meant compliance is now a key business differentiator.

John continues: “Our FIDO 2.0 certification is part of a strategy to put compliance rigour at the centre of our value proposition to companies operating in a range of sectors, delivering a strong, passwordless authentication experience without compromising convenience. Conducting suitable and efficient risk assessments as part of this is crucial to ensure we provide the highest level of safety to both our employees and end-users.

John continues: “Companies should look to regulations such as SCA as an opportunity, and take advantage of technology such as biometrics to facilitate the process. Emulating regulations through embedding biometrics can help businesses and governments protect the public’s security.

John concludes: “It’s key that the biometric industry embraces the rapid evolution of regulations and certifications that are being issued. The FCA’s regulatory sandbox allows organisations to test innovative propositions in the market with real consumers. This ensures that compliance is woven into their service propositions, to produce the best outcomes for businesses and their end customers. This is ultimately in the interest of the public as it impacts a range of sectors, improving services, and strengthening security for consumers.”

January 22, 2020

UK economy missing out on vital boost as SMEs stockpile £86bn

The UK economy is missing out on a vital boost as new research reveals small-and-medium sized businesses (SME) are sitting on £86bn of dormant cash in current accounts paying little or no interest.

Shawbrook Bank’s inaugural SME Savings Monitor reveals this is also causing smaller firms to miss out on billions of pounds in interest.

The research found that SMEs, which make up 99.9% of the UK’s 5.9 million firms, need quick access to 31% of their total cash reserves to cover the cost of day-to-day operations.

However, SMEs are actually holding an average of 57% of their total capital in current or instant-access accounts, rather than fixed-term deals that typically pay higher rates of interest.

Calculations carried out by the Centre for Economic and Business Research (CEBR) on behalf of Shawbrook reveal that this is causing SMEs to miss out on £4.2bn in extra interest each year.

Shawbrook’s SME Savings Monitor provides insight into the attractiveness of the UK’s cash savings market, looking in detail at interest rates, SME savings mix, the number of new accounts opened and SME’s savings ratio. It is also supplemented by a survey of 500 senior SME decision makers to examine how small businesses perceive and behave in the cash savings market.

It found that in the last five years SMEs have increased their cash reserves by £66 billion to £329 billion – equal to 14% of the UK’s annual economic output – suggesting that firms are treading cautiously in the current economic and political environment.

The latest figures from UK Finance show some £186.1bn of this money is being held in current accounts, which often pay no or little interest. This compares to the estimated £140.9bn currently being held in deposit accounts.

Further, the number of new business accounts opened has plunged 21% year-on-year in the second quarter of 2019 – the fastest contraction on record, analysis of UK Finance data reveals.

Interest rates remain low by historical standards which partly explains why SMEs engagement in the savings market has reduced. More than four in ten (43%) firms say higher interest rates would encourage them to engage more with savings providers and the products on offer.

However, a lack of flexibility and innovation in the products available also appears to be having an impact, with 35% of SMEs stating that the ability to choose a deposit term that suits their needs would act as more of a draw.

SMEs also called for a reduction in the minimum deposit size with 24% of firms identifying it as a potential barrier to engagement.

Julian Hynd, chief operating officer at Shawbrook Banks comments: “The amount of money SMEs are keeping in accounts paying little or no interest is indicative of the cautious nature of many firms in the current economic and political climate. While, of course, it is prudent for firms to keep some cash within easy reach to cover the daily costs of running a business, having too much money that is earning next to no interest – can have an adverse impact on finances.

“Small and medium-sized businesses are the backbone of UK plc and the savings industry needs to provide greater incentives to those firms to maximise the interest they receive on their cash reserves. Quicker access to better paying accounts, more innovative and flexible products and improved mobile and online services are just some of the ways providers can help tackle inertia in the market and encourage greater engagement from SMEs.”

January 22, 2020

Lanark pub set for transformation with £350k Assetz Capital loan


Marketplace lender Assetz Capital has provided a £350,000 refinance loan to The Crown Tavern pub in Lanark to fund a refurbishment and third floor residential conversion.

Following the decision by an existing lender to withdraw from the sector, Assetz Capital helped The Crown Tavern with the refinancing package, freeing up additional capital to undergo a light refurbishment of the two-story bar and restaurant.

The loan will also see the renovation of the third-floor space, transforming it into a pair of two-bedroom residential apartments.

As a long-established traditional pub located in the heart of Lanark (Hope Street), The Crown Tavern has been run by Irene Alexander for over 14 years and is popular with locals and tourists alike. Boasting a bar and restaurant area set over two floors serving homemade meals, it also hosts regular quiz nights and Lanark club meets, such as the Round Table and Inner Wheel, each month.

Irene said: “Assetz Capital helped us out of a tough financial situation, allowing us to get back on track and assess where we could invest money into other areas of the business. We have wanted to convert the top floor of the building for some time now as it was wasted space, and this loan has given us the capital and peace of mind needed to do that.”

The loan follows a number of leisure and hospitality deals for Assetz Capital in Scotland, including St Andrews-based luxury guest house Dukeside Lodge.

John Hewitt, regional director at Assetz Capital’s UK – North team, said: “The Crown Tavern is a real gem of Lanark and that is solely down to Irene’s management over the years and the team she works with. We are pleased to have had the opportunity to help with these new plans, and we look forward to seeing them come to fruition in the coming months.”

The loan was brokered independent consultant Gerry Lafferty.

January 22, 2020

Financial services influencers join forces to educate…

Two of the UK’s leading independent financial advice firms, along with a prominent business transformation consultancy, have partnered with M&A specialist, Gunner & Co., to deliver expert knowledge to the financial advice market in how to prepare for the sale of a business.

Financial planning firms, Ascot Lloyd and IWP UK, alongside Standards International will come together to provide invaluable insight at Gunner & Co. ‘s workshop series; ‘Preparing for Exit – How to build value now and exit with the very best value’. The workshop, taking place at locations across the UK, will provide attendees with market leading knowledge on topics including ‘how to prepare for due diligence’, ‘understanding the true value of selling your business’ and ‘optimising your tax position’.

Louise Jeffreys, managing director at Gunner & Co. said; “You’re only going to sell your business once, and we believe it is essential to understand as much about the process as possible, to allow sellers to know what to want from a transaction and how to achieve it. Working with quality partners on these projects is vital, so we’re delighted to see key market influencers such as Ascot Lloyd, IWP UK and Standards International supporting this initiative.”

Nigel Stockton, CEO at Ascot Lloyd, a leading consolidator in the IFA market, said; “Gunner & Co.’s focus on educating business sellers completely aligns to our values. We want business sellers to achieve their goals when they sell to us – including those of their clients and employees – and so the more we can be doing to help the seller through the process the better.”

The seminars will be taking place in Manchester, Birmingham and London this year, providing acquirers and sellers alike with the chance to meet experts in the space and to gain all the necessary facts about the current M&A landscape.

Michelle Hoskin, aka Little Miss WOWW! and founder of Standards International, commented; “I’ve been working with financial planners for two decades, building their businesses with excellence at the core. But many of these business owners are now looking at exit options and need the insight workshops like this provide.”

David Inglesfield, CEO at IWP UK, one of the fastest growing acquirers in the market, also said; “We’re teaming up with Gunner & Co. because there are many propositions in the market, and we believe it is important sellers understand their options as early as possible in the journey. As a long-term investor in the sector, we have a client-centric strategy and a strong belief in the skills and expertise of the staff whose firms we acquire, along with their regulatory independence. Our role is to support the firms we acquire and to provide the resources to allow them to grow.”

January 22, 2020

Demica closes US$30m financing round to accelerate investment

Today Demica, one of the world’s largest working capital fintechs, announced that it has successfully closed a US$30m Series C financing round led by Simcah Management LLC.

Over the past five years, Demica has built a rapidly growing Software as a Service (“SaaS”) platform to manage working capital for over 500 large corporate multinationals financed by 50 global financial institutions. During this time the company has grown funded programmes from US$3bn to US$16bn, established a commercial presence across Europe and North America and expanded its development centres in UK, India and Poland.

Uniquely in the market, Demica’s vision is to give treasurers access to the full range of working capital finance products offered by banks around the world through its award winning portal. Responding to customer demand, this financing round will facilitate adding invoice discounting and distribution finance products to the platform as well as enhancing the syndication and risk distribution functionality. In addition, the investment will enable Demica to expand its North American team and build deeper relationships with the banks and institutional credit investors that finance its transactions.

Matt Wreford, CEO of Demica, commented: “The trend for working capital finance transactions to be managed on independent third party platforms has accelerated during 2019. All parties are looking for flexible financial structures that can be automated with best in class risk mitigation for funders. This investment round takes us another step closer to delivering this vision and transforming how working capital is financed globally.”

David Cohen, managing member of Simcah Management, commented: “As an experienced investor in enterprise SaaS companies, I have been attracted for many years to the working capital finance market due to its substantial size and consistent growth rate. Demica is one of the very few credible platforms that has the potential to reach critical mass on a global scale.”

Completion of the transaction is subject to the requisite regulatory approvals from the FCA. Terms of the investment were not disclosed.

 

January 22, 2020

One in 10 UK SMEs would not survive disruption

SMEs are the backbone of the UK economy but are often one of the first to feel the impact of changes to the economic climate or supply chain disruptions. Research carried out by Aldermore, the specialist bank, on how prepared SMEs are when disruptions occur shows the delicate situation they find themselves in.

One in 10 SMEs believe they would not survive disruption to their supply chain and nearly half (49%) of SMEs do not have contingency plans in place should their biggest supplier fail.

SME supply chains are often complex, even one small change at a single supplier can have a knock on effect. Over 59% of SMEs don’t fully understand all the components in their supply chain and over a third (38%) have undertaken audits to better understand them. Just two fifths (41%) of SME decision makers say they know all of the business customers and suppliers in their supply chain, while nearly one in 10 (9%) SMEs say they have no knowledge of any of their business customers whatsoever.

Tim Boag, group managing sirector, Business Finance at Aldermore, said: “Our research shows a lack of awareness amongst UK SMEs about their supply chains as well as a lack of preparation to mitigate any disruptions. When you consider how vital SMEs are to the national economy, and the impact this could have across every sector, as an industry we need to do more to ensure SMEs are aware of the importance of their supply chain.

“As a responsible lender to SMEs, we strongly advise they make business continuity plans in case situations arise that could quickly and significantly impact their business.”

The research also highlights that 51% of UK SMEs rely on the EU, whether it’s exporting, importing, or transporting goods and services. However, the research shows that many have not necessarily taken the steps to prepare for the eventualities of Brexit; less than a third (31%) have consulted the Government’s guidance for small businesses post-Brexit and just over a quarter (27%) have secured a GB EORI number. SMEs that import goods are more likely to have consulted advice from Government guides (42%) but have also not taken key steps such as setting up a duty deferment account (75%)3.

Scenarios that SME business leaders consider likely to have negative impacts on their supply chain in the future are:

• Rising fuel prices (29%)
• VAT changes (27%)
• Late payments from their customers (22%)

Tim added: “Businesses should undertake more contingency planning; especially those who may have close ties to Europe. However, preparation is being made more difficult for SMEs because of the ever-changing political and economic landscape.

“Aldermore continues to work closely with businesses to help them prepare as best they can for changes in economic circumstances and possible supply chain disruptions. As one of the first to sign the British Business Council’s SME Finance Charter, we have pledged to proactively support SMEs through whatever Brexit scenario plays out.”

Aldermore’s top tips for business to manage their supply chains:

  • Create a supply chain map: although your supply chain might seem simple, most networks can be complex, so it’s important to understand the full picture to help you manage risk. It can be a challenge finding out everyone in the network given that there can be various countries and environments involved. Ultimately, ask your suppliers to assist you with the exercise.
  • Consider potential changes: by creating a supply chain map, you will have a better understanding of how things currently are, but also how they might change or become different in the future. Spend time identifying stakeholders to negotiate with, in case you need to amend certain processes.
  • Build a relationship: building a relationship with your supply chain, both customers and suppliers, can be hugely valuable. Regular contact can help you understand what’s working and what isn’t, making it easier for you to identify and address.
  • Clear and consistent communication: given the large number of individuals often involved in a supply chain, it’s important to ensure communication with suppliers is clear and regular. Passing on relevant information at all stages can help nurture relationships and can also prove useful if anything goes wrong.
January 21, 2020

RSM unveils growth strategy for creditor services business

Audit, tax and consulting firm RSM has announced major growth plans for its creditor services business, including substantial new investments in products, people and premises.

Controlling credit risk
As part of a long-term strategy, the firm is further enhancing its product portfolio designed to help businesses manage credit risk among suppliers and customers. Significant investments are being made in two key systems:

  • Portfolio Risk Manager (PRM) – this unique system enables a business to monitor its credit portfolio, providing unrivalled early access to trusted information including court petitions, notices of dissolution and credit scores. PRM was originally developed for a large utility client, and is now used by a number of blue-chip clients.
  • Tracker – RSM’s popular cloud-based risk management system is being upgraded with a new user interface, providing instant and up to date access to information on company credit scores and financial health. Tracker reveals many different emerging risks, reducing the likelihood of businesses incurring bad debts and facilitating increasingly informed business decisions.

Managing bankruptcies
With bankruptcy numbers rising rapidly and debtor wellbeing recently rising to the top of many businesses agenda, RSM has codified its existing wellbeing processes into a protocol designed to protect vulnerable individuals (and to avoid potential brand damage for petitioning creditors). An emphasis is placed on contacting debtors at an early stage in order to recognise any obvious issues and to tailor an individual strategy to deal with those with mental health issues.

Debt collection
The firm has also invested in a new Customer Relationship Management (CRM) system designed to support the growth of the RSM’s B2B debt collection services. This system will support Creditor Services clients, as well as the firm’s own insolvency practitioners in the collect-out on debtor ledgers.

New staff and premises
Plans are at an advanced stage to recruit an additional partner for the Creditor Services operation. This follows a number of other recent appointments to the faculty’s leadership team. The move reflects a continued commitment to growing the business in an area where some competitors have scaled back or withdrawn.

Under plans announced today, the Creditor Services business will also be rebranding to operate entirely under the RSM brand, and it will be relocating from Finsbury Circus in central London to purpose-built offices in Essex – while also retaining a permanent presence at the Farringdon office. The team of 40 will join RSM’s existing Employer Services business creating a 85-strong RSM presence in Brentwood, bringing the firm’s total headcount in Essex to around 140. The move will take place in May 2020.

Robert Beat, partner for the RSM Creditor Services business said: ‘Businesses and consumers have faced many challenges recently, not least the transition out of the EU. We are seeing strong growth prospects for our business ahead, as prospective clients’ finance departments work to improve their management of creditworthiness among both suppliers and customers.

‘The technologies and processes we have developed are tried-and-tested with clients ranging from SMEs to major banks and utility companies, and we are very well placed to provide clients the reliable and cost-effective services needed to enhance their returns and protect their brand. 2020 will be an exciting time for our business.’

January 21, 2020

£1.9m boost for Greater Manchester apprenticeships

Greater Manchester’s small businesses have benefited from boosts in apprenticeship opportunities thanks to a £1.9m support package.

Since March 2019, when a £1.9m apprentice support package was launched in the city-region, a total of 186 small businesses have received grants of £3,000 to help create new apprenticeship opportunities.

Greater Manchester’s #SeeDifferent Small-to-Medium Enterprise (SME) Apprentice Support package offers additional incentives to smaller employers and helps to remove barriers that often prevent them from creating apprenticeship opportunities.

Mayor of Greater Manchester Andy Burnham said: “This support package has already created a substantial number of opportunities for residents in the city-region and we hope to create even more as we move forward.

“Apprenticeships are crucial in bridging the skills gap and creating good quality employment opportunities which boost productivity. It’s vital that we continue to remove the barriers and make job opportunities in the city-region feel accessible to Greater Manchester residents, both young and old.”

Greater Manchester Combined Authority (GMCA) commissioned the Growth Company to develop and deliver an online apprenticeship Levy Matchmaking Service that ensures as many levy payers as possible transfer unspent funds to non-levy payers – negating the need for them to pay 5% co-investment costs. Since the launch, in August 2019, over £2m has been committed by Greater Manchester’s apprenticeship levy payers which could support over 300 apprenticeships.

Large businesses are encouraged to pledge their unspent levy to the matchmaking service and can do so by visiting the Levy Matchmaking Service website.

Councillor Sean Fielding, leader of Oldham Council and GMCA lead for Education and Skills said: “These results show just how important apprenticeships are to the city-region and that we are doing everything we can to help businesses make the most of them.

“Improving the quality and growth of apprenticeships is a fantastic way to get people into work, allowing them to have the support they need to enter and sustain employment and with the chance to up-skill and progress in their careers. Apprenticeships are an excellent route for anyone looking to start, change or develop their careers.”

Work has been carried out to deliver the Stimulating Employer Demand for Apprenticeships (SEDA) project which has provided 515 workforce development plans that have been implemented across the city-region. The plans aim to highlight any skills gaps or need for upskilling across businesses, then decide how to access training for existing staff or recruit new staff using the apprenticeship model and taking advantage to the funding available to them.

GMCA is continuously working to improve the quality and grow the numbers of apprenticeships in Greater Manchester with approximately 22,250 apprenticeships started in 2018/19.

January 21, 2020

Record-breaking year for Gloucestershire firm

Hazlewoods Corporate Finance team broke all records in 2019, advising on transactions worth more than £1bn.

In the twelve months to 31 December 2019, the team completed 205 deals valued at £1.012bn. This compares to 209 transactions worth £851m 2018.

It is the first time Hazlewoods has burst through the £1bn barrier and represents a 19% increase in deal value on the previous year.

Despite a snap general election and business uncertainty over the UK’s exit from Europe, Hazlewoods has bucked the trend and found the appetite for UK mergers and acquisitions to be buoyant.

It is the fourth year of growth in a row for the Gloucestershire-based firm which was named the most active corporate finance adviser in the South West by Experian last year.

Corporate Finance partner Paul Fussell said: “2019 truly was a bumper year for us and we are delighted to have guided so many clients through the exciting process of buying or selling a business.

“Our Corporate Finance team continues to go from strength to strength and all signs are positive that 2020 will be busy too.”

Hazlewoods has significant expertise in helping businesses to grow, taking entrepreneurs from start-up, through fundraising for expansion and corporate acquisitions to ultimate exit from a business.

As well as sustained transactions in the general market, the corporate finance team has also seen a continuous volume of deals in key sector specialisms such as veterinary, dental and health and care markets.

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