The team at Informed Funding have brought together a fascinating range of speakers to talk about cash flow and what businesses can do when they have insufficient or badly structured debt finance in place.
A key challenge for New and Growing Companies is growth and how to finance it.
But, rest assured, there are an increasing range of funding options available to New and Growing Companies and lots of interesting alternatives to consider when thinking about growth. Steven Renwick and John Davies are just two of the speakers who'll be talking through various alternatives at the 'Borrowing to grow - securing the right borrowing for your business' seminar on September 22.
Steven Renwick, founder of the invoice finance company Satago, is particularly interested in the funding challenges faced by younger companies and startups. Average turnover of his customers is less than £500,000 although they do have one or two with a turnover of above £20m. 'We think the sweet spot is younger companies that are digitally savvy and use cloud accounting software but that don’t have very deep bank relationships.' They find the service Satago particularly useful as they often have a very limited credit history and so struggle when approaching banks.
Satago finance up to 85% of the value of each invoice and, because the whole system is so highly automated, they can finance invoices as small as £500.
'What we find is that 80% of our business happens in the last week of the month when people need to bridge cash flow gaps - companies come to us and finance four or five invoices to get a few thousand pounds credit line so they’re using it like an overdraft. That’s fine because we’re actually trying to give our clients as little finance as possible, not as much as possible.'
Satago finance up to 85% of the value of each invoice and, because the whole system is so highly automated, they can finance invoices as small as £500.
However invoice financing is only one of a range of options. John Davies founded Just Cash Flow in 2013. To date, it has funded 400 companies, providing them with a Revolving Credit Facility that operates in much the same way as a business overdraft. Companies have flexible access to a borrowing facility that they can draw down and repay as they wish, paying interest only on the sum outstanding each day.
In some ways this is similar to the service banks provide, but Davies is keen to point out that this might have been the service banks provided a couple of decades ago but no longer do now: 'Today a lot of lenders use algorithms to make credit decisions.'
Just Cash Flow wants to put the human back into banking:
'We do a 20-minute interview at the outset. Then we gather a great deal more information from new customers and analyse that, and then finally we do another 45-minute to one-hour interview with one of our Account Directors, who are former commercial bank managers. They’re want to know whether this person actually understands the business they’re running, how it should be run and what their future looks like.'
From then on they're keen to maintain an ongoing relationship with anyone lending. Tellingly, Davies says that from meeting with lots of business owners looking to raise money to grow their business, there's one key issue.
'Education always will be the biggest challenge and the biggest frustration.
John Davies, Just Cash Flow
'Education always will be the biggest challenge and the biggest frustration. How do you educate young, growing businesses in the skills they need to build a business and what’s the best way to support them to do that?'
And that's where Informed Funding and Workspace come in. 'Borrowing to grow - time to take a fresh approach?' will take place on September 22. The morning will tackle the questions you're bound to be asking. Have you got the right facilities in place for your business? Are you aware of the range of options now available? Do you understand the personal and business risks involved with different types of debt?
The panel of legal and financial experts will talk through the dos and don'ts of negotiating different types of debt and then the panel of funders will answer questions on which types of debt products suit particular businesses. It promises to be an insightful and practical morning.
