Archive
Brexit finally. But are “services” at risk?
With a trade deal finalised, the focus has shifted to the nature of the Brexit world for the UK service sector. It is easy to find polarised views and the fact that certain conditions do not appear to have been finalised has been a red rag to opposition of HMG and those who cannot accept that Brexit has been completed.
How do we judge this? Analysing a near 2000 page report is not going to be within our means so I believe that the next best solution is to look at the reaction of other significant parties. This can be the media or those actually taking hard decisions in industry
No one would claim that the Guardian is a friend of Brexit or the Government but this piece on this very subject is quite revealing. Its a relatively balanced report but the only area of concern that was seriously seized upon was Audit. That comes down to the mutual “recognition” of qualifications and ignoring the somewhat hysterical reaction quoted from an accountant, surely that will be imminent? EU states will most certainly wish to see their accountants having access to experience in the UK and “recognition” is the norm rather than the exception between first world states.
Financial services and the city are also a focus but here again we should look at a salient fact. Employment in banking in the City has actually increased since 2016 so a fair conclusion is that despite the bluster form some parties, the City is certainly not anticipating an exodus of employment
Lastly there is Digital and that is the relatively easy to address. The government is confident but surely Google and Bloombergs (to name two) heavy investment in the UK as a European HQ nails any doubts.
An unforgettable Santa
Following the positive reaction to my set of vintage xmas photography, this absolute gem appeared in the Observer last weekend
Great photojournalism need no words
Happy Xmas
And a very happy xmas
To all my readers.
CBILs and Bounceback extension?
The excellent James Hurley at the Times reports
Some rumours of possible extension of BBLS and CBILS to March to help companies through Brexit transition / continued Covid restrictions, with new scheme perhaps kicking in at that point. Just rumours though.Quote
CBILs replacement due to be unveiled
More or less confirmed by Reuters, a seemingly like for like replacement for CBILs is on its way
The United Kingdom is planning to launch a permanent replacement for the 65 billion pounds ($86.86 billion) COVID-19 loans programme with new state-backed guarantees to support lending by banks to a range of small to medium-sized business, the Financial Times newspaper reported late on Sunday.
The new loan scheme may carry a guarantee of up to 80% for loans of up to 10 million pounds for businesses deemed viable but unable to get finance from their lender, the newspaper said. Banks would be allowed to set interest rates for the new loans but the rate is expected to be capped at about 15%.
Im not sure that this will be entirely welcomed by all the lending industry and will possibly hit asset based lending. Having said that, rates of up to 15% are not exactly competitive and most invoice financing arrangements would be substantially cheaper and a whole lot more flexible. I also sense that many lenders will be looking to lend at the higher end of the scale given it will not be seen to be quite so unethical to do so once the pandemic has died down. Yesterday I saw a rate of between 12 and 15% and even a relatively mainstream lender quoted 8% to me (and ridiculously claimed that the British Business Bank set the rate)
Why HMRC should be careful
Unfortunately the story behind this piece is behind the Times paywall but whilst there is a revealing story which is certainly worth reading, this revolves around two pretty straightforward points
First debt collectors should be abiding by a code of conduct and not this.
The findings come after The Times revealed yesterday that HM Revenue and Customs has sent letters to families during the pandemic accusing them of “deliberately” choosing not to repay debts and threatening to “take things you own and sell them”.
Secondly HMRC are using a collectors run by Jersey based tax exiles with a somewhat colourful past. It would also be fair to say that their flash public image is not exactly appealing either
Why are HMRC associating themselves with these people? And shouldn’t HMG be very aware of reputational damage?
No one is denying that debt collection is often necessary but at least do some due diligence and use UK based firms that pay UK taxes and behave in a professional manner
Funding Circle. More negative publicity
Few would describe Funding Circle as well liked in the financial market. Traditional lenders are sniffy about there model but small investors and brokers also have felt that they have been treated with contempt. Having said that, in my experience they do employ some very decent staff. A pity all round
Partly because of this, the media will seize upon negative stories and this is the latest.
Whether the sale of debts to a third party is strictly ethical or not is very much a judgement call but potential borrowers should be made aware that this is a possible outcome for any agreements they enter into. Arguably there is a case for such a disclosure to be compulsory
Either way its a long journey from the fluffy fintech image that they have struggled to convey to the wider business world
Cafe Nero in a CVA
Cafe Nero has been one of the Uk’s three major chains, competing alongside Costa and Starbucks. It was originally seen as a cut above the competition although personally I always found their coffee far too bitter.
Remarkably it appears to have fallen into severe difficulties and whilst the chain does not appear to facing the bleak future of a Debenhams, it is certainly failing. Coffee chains should not fail in these times.
Naturally the crisis will be cited as the reason but is this as really as valid as Jamie Oliver’s laughable claim that Brexit was to blame for the collapse of his mediocre restaurants? Did they offer takeaway? Weren’t they able to find HMG support\?
Nero have been losing their way for sometime. The shops are tatty and have clearly received no investment for years. Ive found the employees to be charming on my rare visits but some branches were horribly understaffed leading to cluttered dirty tables and long queues.
I haven’t looked back through the accounts or examined the ownership but this stinks of a business that was simply unloved and run down with no thought other than to milk the revenue
As a credit manager I was told and quickly learnt that visiting a clients premises is a very strong indicator of a businesses credit worthiness. You can feel either the energy or the decay. In my experience, the vibe at Nero was most certainly the latter
Advantedge aquired
Advantedge have been acquired by E Capital corp an American lender for what I believe is a very reasonable price.
Through this blog, I do not make a habit of discussing individual lenders or their place in the market. Thats knowledge which is key to my work of course but I will say that I have a lot of time for the team at Advantedge and have also noted that they have significantly strengthened their team with a couple of very strong recent recruits. They have built strongly since they were branded Factor 21 (not a great name)
So what’s the point of this post?
To my mind this indicates that the independent invoice financing market is possibly looking towards a very profitable future. The valuation given to the business would certainly indicate that to be so and this is perhaps not unrelated to the major banks gradually withdrawing from the market.
More on the invoice finance “working from home” drift
I have been brokering invoice financing for close to ten years. I have contacts with just about every lender and always explore the market thoroughly for my clients. Its the clients I represent
Responsiveness to new leads has always been close to immediate. Until now and I blame “work” from home
I know I touched on this a couple posts back and some will claim that lack of responsiveness is down to lack of appetite for lending. Not true
Firstly, even if the lender is pulling up the drawbridge a little, the BDM has to keep the broker onside. To their credit one lender who’s appetite at the moment might be questionable, pressed me for a Team call today.
Secondly I know the lender’s appetites and a current example illustrates this well. I wont identify but three lenders are in the frame for a nice little deal with a terrific growing business in an easy to finance sector. One lender has put terms on table which were not quite right. Last Friday I texted him to call me Monday
Nothing
Another lender is simply not returning calls and yet I know for a fact their appetite is high
The third lender is excellent and as responsive as ever. They will win the deal
I have not experienced this at any time during the last ten years and there are another couple of examples of other lacklustre BDMs I could mention.
Many BDMs will claim that they WFH anyway but I suspect that on both their side and their management’s, the lack of genuine interaction is allowing matters to drift
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