Archive for June, 2016

Brexit. What is a business to do?



Perhaps the greatest concern for those in the business finance sector is the almost certainty that many businesses will not be looking to invest or expand whilst there remains this uncertainty over Brexit. This is perfectly understandable in the short term but eventually there will be a slow realisation that the almost invariably their trade is not in the slightest bit affected by “trade agreements”.

Most businesses do not export to the EU but are bound by their regulations and form filling. Whilst I am not not aware of the precise detail and the resources required for such unnecessary and tiresome tasks surely there is an element of benefit?

SMEs will require reassurances going forward. There is a natural and understandable tendency for owners to perhaps fret just a little too much when faced with uncertainty although this is understandable given the depth of their commitment

They will need a boost so how about the brexiters giving some assurances to help drive this most important sector forward?

My suggestion would be a strong direct campaign detailing why trade agreements are not an issue on the one hand and the accused benefit of freedom from “red tape” on the other. This should also be communicated in simple terms




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Brexit. What will it mean?

I am sure that many readers will have absorbed quite enough information and one more view may not be welcome but here are a few thoughts that do relate to the world of sme finance

  1. The trade agreement issue is heavily overstated. The eu itself has very few completed trade agreements with the rest of the world with the USA Japan and China being rather significant exceptions. The idea that by leaving the eu we will dive into a spiteful tariff war is fanciful to say the least. Such a prospect is of no benefit whatsoever to either side
  2. It is true that most smes will be freed of “red tape” but will it be to the extent that it will seriously affect productivity or is it just a painful nusisance
  3. There is a view that eu regulations stifle creativity in the sme sector but is that really born out by the astonishing developments and growth in the tech market in London ?
  4. Is the eu committed to reform or further integration? This really is a big unanswered question. My view is that a rolling back from the idealistic superstate is more likely than a forward push.
  5. A minor point but signicant for many in our trade. There is apparently a push towards harmonisation of insolvency and company laws. I am sceptical about that practicality of such a move and will come back to this.
  6. Will a single truly unified market entity with so many varying business cultures ever really work or is this just the euros problems repeated on a smaller scale?



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To visit or not to visit?


Last week I was at an interesting event where I met  a number of other brokers. Usually this is not my idea of great company but in fairness there  were some pleasant conversations

One item came up which continues to surprise me. The question of how you engage with a  client. Do you simply try to broker the arrangement remotely or do you make the effort to actually visit the prospect?

It would appear that I am certainly in the minority but each and every time I will make a big effort to sit opposite the client and explain precisely what they are committing themselves to as well as ascertaining some pretty important information necessary for all parties

Why is this so important? I will give a number of reasons

  1. Financing is vital to the business. You have to fully understand not just what they have achieved and are are presently achieving but also what the future holds. You need an open discussion
  2. You have to match the client to the lender. Quite frankly some business development managers are simply not going to relate well to certain clients.
  3. Asset based lending is long term. You are building a relationship which could last many years. I have a number of very good relationships with clients which have developed into other areas
  4. It should certainly not be just the lender who is assessing the client. The broker should act as a conduit and a his or her opinion should be of value. Fortunately my long experience in commercial credit management is of assistance









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Bhs. A test case in so many ways


Could the recent collapse of BHS be a pivotal moment in the world of corporate greed? I believe so on a number of counts

Firstly Philip Green is a very recognisable but not especially likeable figure. His public profile has been cultivated and his very high. The public is watching this with interest

There is I believe a growing and probable irreversible impatience with the super rich seemingly endlessly profiteering from their business failures. This goes back to and is most resonant with Fred Goodwin and assorted bankers. Stripping knighthoods is not seen as enough

Philip Greens very open “tax planning” leads us to the wider concern that large businesses and their directors are simply not paying their share.

Then there is the very issue of the law. This is a fairly strong quote from the parliamentary committee

Lord Myners, the former city minister and adversary of Sir Philip who is advising the MPs on their inquiry, said: “There are clearly issues here of potential fraudulent preference, of creditor preference and of misappropriation of corporate assets under the direction of the directors of the company.”

To many the most serious issue of all is the pension pot. Rightly so and throw this into the mix with the added impact of the loss of a  fairly well liked high street brand then we have a fairly ugly picture

How significant is this? I would suggest very much so. Look across the ocean to the presidential campaigns and look at who has made the most unexpectedly significant advances. Sanders and Trump may not win and even though it’s a little hard to stomach from Trump, they are firing off at the financial and business establishments with a high degree of success.

Big business and  banking are seen as poisonous self serving and arrogant. My belief is that if there is not a huge improvement in governance and behavior then we may well witness a public anger that will drive a severely anti capitalist agenda.



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Was the BHS owner a moron?

Dominic Chappell posted this to his Facebook page

“all politticans should be treated with the true comtempent they diserve.”

No I haven’t mistyped that quote but you do shudder that someone with the spelling ability of a seven year old was entrusted to run such a challenging large business with the responsibility for 11000 jobs

Perhaps even worse is the fact that if he is a bit thick (as reports would certainly indicate) he has not even got the self awareness to keep his embarrassing weaknesses under wraps


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“Factoring” on the increase

Firstly I really dislike the description “factoring” tainted as it is with missold facilities, seedy salesmen and shoddy credit control. Invoice financing or even better, asset financing is far more appropriate. That however is not the point and of more interest is the growth of this form of finance across the globe

The report does highlight some fairly dramatic statistics and I will admit I was fairly surprised to see that comparatively the American market is quite significantly smaller than Europe or Asia.  I will be taking a closer look at this with some interet but in the meantime there was one item that struck me as possibly significant.

The market in the USA declined by 3%. This is a significant number in what is still a huge market. Is there an explanation and a pointer to the future?

That question hinges on whether these stats include the fin techs or not. If they do not then we have a clear indication that in the home of the fintech there is a significant eating away at the established market.

The natural response is that soon enough what happens there will happen here


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