The other side of Brexit and Financial Services

This piece is pretty self explanatory although it’s being reported elsewhere that the actual figure is probably nearer 1500

The simple fact is that the UK is not going to relinquish its role as a hugely significant centre of global finance. As this blog has stated before, alternative European centres are ranked far behind. In fact I believe the next two centres in terms of size are not Frankfurt and Paris but Zurich and Geneva. There is of course a pattern there

Its hardly a secret the sectors congregate. One of my previous careers was in advertising where being located a mile beyond Soho or Fitzrovia was seen as remote as Greenland.

Do not be surprised to see the UKs finance sector grow stronger and most especially in the areas where innovation is key

A banks disgraceful response to a CBILs application

People may ask why finance brokers are necessary. Surely the lenders have the client’s best interests at heart and will act honestly and ethically when support is required? Surely they have their good names to protect?

Not a chance. This is banking.

A very good client of mine applied for a small CBILs loan and were had these responses from a lying lazy incompetent employee at HSBC. Or I assume that was the case? You really have to hope that the following is not the banks policy…

These were the respinses

“You have money coming into your account. Why do you need a CBILs”

“CBILs will greatly damage your credit rating” (there was even a hint at personal credit rating too)

“We have better solutions than CBILs such as an overdraft”

What total drivel. Any form of receipts disqualify you from CBILs?

Credit rating? Since when?

Overdraft “better” than a interest and fee free loan for a year? Haven’t they got a calculator?

In fairness not all the big banks are behaving this way and a lovely client of mine was supported in genuinely difficult circumstances by Barclays after numerous independents had rejected. I also have good contacts at HSBC and will never tar the whole bank with the same brush but they shouldn’t be surprised if others do

Lenders to be kicked off CBILs?

A very well placed source of mine who is close to the British Business Bank, has told me that there is a great deal of unhappiness with the way CBILs have been used by certain lenders. Its worth remembering that CBILs was clearly intended to be just for businesses genuinely affected by covid but (and as I can confirm from experience) loans have been granted regardless of the impact of Covid on the borrower. This has been particularly prevalent with certain lenders who’s lending is purely data based.

The result of this is not likely to be removal from then current CBILs scheme but from the scheme that replaces it. Quite damaging I would suggest because the “son of CBILS” is clearly intended to be for the long term. Its also thought likely that the list of lenders to be invited to participate has already been determined but more interesting will be those that have will not.

The Amazon effect on invoice financing

Like them or loath them, Amazon are most certainly here to stay and in a relatively short time, they have become probably the dominant debtor across the whole invoice financing sector. Is this a good or bad thing?

The comparison should be drawn with the existing high street retailers and in these terms, Amazon’s profile is not too bad. They are certainly preferable to Argos with their ludicrous contracts, Tescos with their notorious bullying, Sainsbury’s and Boots with their very tardy payments. The list goes in with even the likes of John Lewis having been guilty of the nasty imposition of “retrospective discounts”.

Amazon’s contracts are quite demanding and they are generally split into two formats. Simply put one is where the supplier is a traditional supplier to Amazon and one where they are effectively an agent through their site where the supplier delivers directly to the customer.

The first is quite easy to fund through invoice financiers although though in one significant and slightly ludicrous case, a very prominent invoice financier cannot fund because the jurisdiction is in Luxembourg and it this “exceeds limits” with that country. Talk about tail wagging the dog

Surprisingly the second scenario can also be funded. Amazon collect on behalf of the supplier but it can be over three weeks before the cash is passed on. That can be critical and there is a new very able lender in the market specialising in those precise transactions. I am of course happy to introduce interested parties

There is rightly a wider concern about Amazons increasingly monopolistic profile and lack of competition is never a benefit for suppliers. Sometimes their seeming insatiable appetite to dominate every market (although they failed quite badly with Food) is a little unnerving and there must surely come a point where states will seek to intervene?

The death of mob handed Zoom meetings

Having rigorously avoided group Zoom meetings up until now, I finally attended a very well meaning meeting organised by a decent lender for brokers with guest speaking solicitors and insolvency practitioners

The problem is unwelcome guests. In reality these meetings can just about work on a smaller scale but are deathly with too many in the room, especially if you are wondering why you have to listen to an IP bemoaning that not enough businesses are going bust.

The video call revolution is frankly petering out. I know of no one who relishes them as an alternative for real interaction and the quicker we get back to normal the better

Do Invoice Financiers understand professional brokers?

Judging by a survey I just participated in, I’m not sure that they do…

Very nice lady from the opinion company at least three questions which were, in my opinion, absurd

Taking them step by step (and wording may not be identical)

1. Which other invoice financiers do you engage. Answer. There are at least fifty in the market. How long have you got?
2. Do you promote invoice financing above other services? Answer.Im a broker. I give professional advice for the clients requirements. I am not a salesman.
3. Would you recommend this lender to other “introducers”. Answer. Are you kidding? Im not here to assist other brokers or introducers

The last question was more amusing than anything else but it is fair to say that years of acquired market knowledge are not going to be dispensed for the benefit of other less resourceful “introducers’. The two other questions reflect a mentality that brokers will only engage with a tiny handful of lenders to flog invoice financing above all other solutions. That will never be the case with me and nor should it be with anyone else.

This isn’t me getting on my high horse but invoice financing is a complex mix of factors (no pun intended) and finding the right lender can take time but is also essential for the clients prosperity. The wrong facility can be catastrophic as can be the wrong product.

Whats happening in the invoice financing market?

A broker’s role is to keep up to date with their market specialisation both in terms of which lenders are financing which types of facilities and who is ‘open for business’ and who is less so. Its a full time job

Most lenders will continually create the impression on Linkedin and through advertising that they are funding “like never before” but the tested with proposals, the reality can be very different. I do have discreet contact with a good number of lenders who will tell it ‘as it is’ knowing that it will not affect the on going relationship but with others it can sometimes entail a degree of kremlinology

So what’s currently occurring? I covered some observations in my predictions post but there have been further interesting developments.

I hear of a strong rumour that a particular independent is going to withdraw from the market. Clearly I cannot say who but it’s a respected name and may surprise some people. I am also finding that certain lenders (including the aforementioned) are suddenly very much more cautious than perhaps just a couple of months ago. Yes my sample is small and I might be incorrect but I have indications through new proposals and accounts that have existing facilities with lenders. I am also still finding that responses from many Business Development managers are in complete contrast to previous years. Whether its the malaise of work from home or the market is hard to determine but I’m having to remind certain lenders to actually return calls

In times past I might blind copy say an initial 10 lenders on a lead and then phone would almost be ringing before the email had been sent. Not now. I had a very tardy general response to one lead circulated last week

And yet some lenders are blaming CBILs for a lack of prospects. Personally Im a shade busier than normal with a clutch of very welcome leads for a wide variety of sources but again thats a small sample in terms of the market.

I do sometimes detect an underlying resentment at the provision of the HMG lending to businesses and maybe a fear that it could become embedded in a tailored form but naturally banks complaining about Government support are not exactly likely to receive a lot of sympathy and maybe more likely to elicit very blunt responses