The Current market

The invoice finance market is constantly changing with more and more products becoming available. New entrants are appearing on a seemingly weekly basis. Its a full time job keeping up with developments but that in itself is essential if you are going to find the best solution for your client.

This year I have managed financing for a whole range of businesses including oil brokering, retail, haulage, IT, security, promotional materials, publishing, media and so on. Working closely with these clients and the financiers continues to give me a good insight.

Lenders will never advertise a lack of appetite or a change in strategy. The brokers skill is reading the signals. Naturally | am not going to specify partilcular lenders but here are some observations and predictions

1. Within the last few months two reasonably significant lenders have certainly pulled away from new business. In both cases I was somewhat surprised. In neither case can I give a reason why and in truth similar sized lenders remain hungry for new business.

2. PTP continues to grow and there are a number of entrants looking to take on the clear market leader. However most of the players in this market are still very reliant on outside investment to continue and there will be casualties.

3. The high charging more traditional single invoice providers will struggle in the face of more competitive PTP lenders and we will see further disappearances from this sector

4. The established lenders are finally getting to grips with single debtor or single invoice lending. Just this week we arranged a proposal from a lender to my client which would not have been considered in previous times

5. According to a number of my sources, two major banks have come close to withdrawing from this market in the past year and one is still predicted to do so. My belief is that they will withdraw from a certain segment of the market than the whole

TPP and Trump

It could be argued that the reaction of the above Singpaore based asian lion reflects the feelings of some of that continent towards Donald Trump’s tearing up of the TTP treaty.

But not China. And as explained here  this is surey simply handing to China a free reign to extend more influence throughout the region. That is not in line with the rhetoric of pre election Trump and frankly this is appearing to be nothing more than an ill thought through headline grabbing act which will deliver not so much an unintended consquence as much as one that has not been dismissed solely to keep in line with the tiresome black and white worldview

Lord Adair no longer trashing peer to peer lenders?

 

As reported here 

Earlier this year I posted that his comments at that time were hard to take given his background and his industry’s failures but he has gone on to make some pertinent points of which the following stood out for me

The former regulator said much of the talk around fintech is “hype” and said peer-to-peer lending’s approach to underwriting loans was not that different.

He said: “Credit assessment is not radically different in approach to that already deployed by the incumbent banks.

“This hierarchy of different credit approaches has been in place for many years, and I am not convinced that the growth of direct non-bank lending or the use of information technology by challenger banks will radically change it

So very true. Credit is credit and anyone who believes they have unearthed some unconsidered approach is kidding themselves. Rather like the tipster who has a “new system” for backing horses, such beliefs express nothing more than nativity. In fact just as with backing horses, credit takes into account a hug range of factors which all need to be weighted and considered

If I was to draw a distinction between ptp lenders and the established industry it is that one asks too few questions, relies too heavily on numbers and is quick. The other asks far too many questions and is slow

Both are guilty of a tick box mentality and with both a loan and invoice financing in last two weeks I have had lenders turn down excellent opportunities (now placed elsewhere) simply because they couldn’t or wouldn’t grasp the overall picture

The ideal lender is quick, has a firm grasp of the overall picture and makes an effort to understand the business whilst respecting a degree of privacy

And it’s not at all bleak. I would suggest that there are a number of invoice finance lenders who do adequately fit that criteria

Trump. What does it mean?

I will spare readers yet another profile of the worlds worst haircut and provide an illustration of what many commentators believe is the driver behind Trump’s stunning victory. The “rust belt”

There has and will be an avalanche of analysis over the coming weeks but for what it’s worth, here are a few of my thoughts which avoid the directly political

– Firstly the president of the US is the most powerful politician in the world but has considerably less power than is often assumed. US government is sclerotic at best. It’s difficult to imagine some of his wildly promises standing any chance of coming to fruition in the first term.

– This is being touted as a defeat for Globilisation. Fine but be careful what you wish for. If a state wishes to grant strong tariffed protection for industries then someone will have to pay. And that will be the consumer. The freer the trade the greater the competition which in turn clearly benefits the clients.

– Are we at the risk of overstating the so called “angry white males” . There is a tiresome tendency  to look back with rose tinted glasses at bleaching factories and dangerous boring work. There is also the curse of the manufacturing fetish. Yes it’s not easy for many that many traditional industries have passed on but frankly that is the natural order of things and to be a little callous, this “angry” white middle/older aged generation will also be passing on in the not too distant future

– How can you own a string of Casinos and go bust?

 

Look at Life

Those of a certain age may well remember the Look at Life short films that were played out in Cinemas in the 50s and 60s. I only have a very vague recollection but viewing them now gives a truly fascinating view of british life at that time

They are quite easily found on youtube but this blog is a useful link

 

The differences between differing trading agreements

These pieces are always a good excuse to insert a photo of one of those magnificent huge container ships that are very visable from the trains i frequently take to the New forest and beyond.But what exactly are the differences between a single market, customs union and a free trade area as well as other hybrid options? This article summarises well which I  have summarised below

1. Free trade area. Is pretty well what it says on the tin. No taxes tariffs or quotas but member state laws can apply to certain goods. This is effectively the agreement (eventually) signed between the EU and Canada last week. You can understand why with exemptions in place, it took seven years and why it is also vulnerable to a particular party vetoing the same
2. Single market. As above but with free movement of capital and services. This is effectively the current EU
3. Customs union. This is where member states agree to the same tariffs for goods imported from outside the agreed union and then can be exported across that union without further tariffs
4. Other options. This is perhaps where the most intruiging and developing example of Switerland fits in. They have a range of bilteral deals which give them access without full commitment. This is currently being tested by their policy over free movement