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WHAT ARE THE ALTERNATIVES TO HIGH STREET BUSINESS LENDERS?

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LENDERS

by Nic Redfern , Director ,NerdWallet

 

High street banks have typically been the first port of call for businesses looking for credit, whether that’s in the form of an overdraft or a business loan. However, high street banks seem increasingly reluctant to lend to small and medium-sized enterprises (SMEs), and this, combined with the lengthy application process, can put businesses off from applying for funding.

Indeed, many businesses continue to be wary of using any kind of credit, even to expand and grow their operations.

But with the rising numbers of alternative lenders, businesses are seeing that high street banks are far from the only source of finance available. Many of these alternative lenders are specifically targeted at SMEs and offer various forms of finance to cater for different business needs, so they are becoming increasingly popular choices for businesses in need of funding.

Below, we highlight some of the alternative lenders for small businesses and discuss some of their advantages and disadvantages.

But before applying for a business loan from any lender, make sure you research your options as each lender will have different terms and payment structures.

 

Online challengers

Particularly in the aftermath of the financial crash, we have seen the emergence of new finance providers that are challenging the dominance of the big-name high street banks. These challenger banks and online lenders offer new opportunities to businesses looking for external finance- providing a faster application process than traditional banks and often being more prepared to lend to SMEs.

They can also offer smaller and more short-term loans, in contrast to high street banks which impose a minimum loan amount.

Online lenders use the latest fintech to make it easier for businesses to find a loan that meets their needs. However, even though online lenders may be more willing to take on risk and approve applicants with a less-than-perfect credit history, their loans may also come with higher interest rates to compensate for this.

 

Peer-to-peer lending

Peer-to-peer lending is sometimes described as an online marketplace. It matches people who want to invest and lend money with those who want to borrow, cutting out the middleman of the bank.

Like other online lenders, peer-to-peer platforms enable businesses to apply for and receive funds in a short space of time, although they will usually need to pay an arrangement fee for the service. Interest rates will vary between providers and will depend on the profile of your business, but it is possible to find favourable rates if your credit history is good.

 

Grants

Grants are one of the best funding options, simply because you don’t need to repay them.

However, because of this, the application process is often very lengthy and may include an interview. Grants can also have strict eligibility criteria, for example relating to location, industry, and age, and they may have restrictions on what the grant can be used for, such as equipment purchases, property refurbishment, and training.

Although competition for grants is high, there is a large number of national and local grants available for all types of businesses.

 

Angel investment

Angel investors are wealthy individuals, typically experienced and successful businesspeople, who invest in early-stage businesses.

Businesses can source and apply for angel investment in many ways, but the easiest way is likely to be through online platforms.

Rather than a typical loan with repayments, this arrangement would usually mean the investor takes a share of your business profits. So, business owners would have to weigh up this loss of shares with the benefits of receiving an immediate cash injection, as well as any guidance and contacts that the investor may bring.

 

Crowdfunding

If you have an exciting product or service to launch, you may want to try setting up a profile on a crowdfunding platform that people can then donate to. However, it can be hard for businesses to reach their target sum through crowdfunding as they need to build up enough interest in their proposition.

There are different types of crowdfunding platforms which arrange different forms of “repayment”. For example, businesses may repay their supporters, offer incentives/rewards to backers, or even offer shares in their company.

 

Invoice finance

For businesses that are already trading and have money tied up in unpaid invoices, invoice financing can help to release some cash flow.

Businesses receive a loan based on the value of unpaid invoices, with lenders usually paying them a set percentage of the invoice value. Depending on the exact arrangement, the lender may then own the invoice with the customer paying the full amount to them (invoice factoring), or the business will repay the lender (with fees) when the customer pays them (invoice discounting).

Businesses need to balance the advantages of releasing money to boost their immediate cash flow with the fact that they would lose a proportion of their invoice value. It could be a useful arrangement for sales businesses, that may need to pay for stock before they have received money from its sale for example.

 

Finding the right lending option

These are just some of the alternatives to high street lenders that businesses in need of funding can choose from, but there are many others available such as tax loans, merchant cash advance, and asset finance.

The lending option that is most appropriate for you will depend on the stage your business is at, why you need funding, and the borrowing timescale you want. Not every alternative lender will be the “easiest” or “best” option, so it’s worth shopping around the different lenders to find the best deal for your business. With so much to look at, you may find it useful to use a broker to help you make your decision.

 

Business

SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD

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SET YOUR BUSINESS UP FOR SALES SUCCESS IN A POST-PANDEMIC WORLD

Dean Fiveash, Head of FinTech Sales, IFX

Without doubt the Coronavirus pandemic impacted every aspect of our lives and fundamentally changed the way in which we all conduct business.

From the widespread adoption of working from home, to the amplified focus on employee wellbeing and work life balance, to simply acknowledging that people are more than their job titles and are often juggling childcare, pets and terrible wifi issues all whilst trying to do their job. The last 18 months have altered the way we work forever and in order to set our businesses up for success we have also needed to rethink how we operate.

Dean Fiveash

In a people facing sector like sales,  it’s  clear that the loss of face-to-face interaction is perhaps the biggest loss and an impending challenge as we slowly emerge from the confines of the pandemic. Gone are the days of instant downloads from ‘water cooler’ conversations with the team discussing deals or general matters. Instead, our inboxes and diaries are full of zoom catch ups. This isn’t to say that success has dwindled. Flexibility of working from home has helped many businesses to grow rapidly. In fact at IFX we have enjoyed our ten best months of company sales, but there is no denying the way in which we work within our teams has shifted. So how can you set up your sales teams to maximise its chances of success?

 

Adapting To The Times

For many businesses operating during these unprecedented times the shift towards the work from home culture has seen its benefits. Speed is key in the fintech industry and video calls on top of isolated working has greatly improved our time efficiency allowing us to do more for our clients in the long run. Equally, with the workforce being spread around the country and in some cases even globally, came the need for further rigorous checks and processes to ensure the high standards set in the office environment are still being met.

Despite this I would argue that this made us better sales people, and in turn a more successful and thriving sales team.

Post-pandemic success is grounded in not just the talent of your employees but also how you choose to structure your teams. For me, the old adage ‘People Buy People’ remains the most relevant factor for developing a slick sales team. At the end of the day, the technical stuff can be learnt over time but the proficient people skills needed in client facing roles is more innate.

When evaluating team skills, individuals who demonstrate determination and the ability to keep smiling through adversity are a vital asset, especially in the fast paced fintech industry.

Having worked in numerous team leader roles within the sales industry,  I know the difference that a collegiate and supportive team can make to successfully securing deals. The key is to have people at your disposal who are going to pitch in to help others, in turn making the team more robust. In the post-pandemic world, this will remain the key quality to look for and embed as a core value across the business.

 

Fostering A Successful Culture 

Whilst the team structure and core skills are an important part of the team set up, good management and personal development structure is crucial to success. At IFX, our sales leadership team all have client portfolios and are regularly signing and navigating deals. It’s through giving my team practical experience and regular client interaction that we can gain far better market insight than through managing team activity or KPIs alone.

More discipline is also required when working at home to retain the sales focus whilst navigating domestic distractions. As such, maintaining your employee motivation and focus is something each business should work on. A difficult feat without the physical presence of your team and one balanced on knowing your employees and their individual needs. But little things go a long way, so incentives and perks such as company socials, bonuses or simply a free breakfast can work wonders to motivate others. Another tip is to set  attainable goals and regular check-ins with your team to keep motivation on track to reach peak productivity.

 

Looking Forward

Team dynamics will continue to change to adapt to the ever-changing and rapidly evolving landscape, the secret to success will remain the same.

Something to look forward to in the next couple of years as a movement,  is the greater adoption of smarter contracts and embedded FinTech, which of course as businesses and as a team we will have to adapt to.

Ultimately, my biggest piece of advice to others is to get the basics right.  A leading-edge solution fails to achieve greatness if it isn’t backed with competent sales/relationship managers and attentive operational support. Traditional ingredients for success such as reputation and trustworthiness are built over time, often through word of mouth, but building a competent team who can make your clients happy is essential to that mix

 

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THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT

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THE EVOLVING TECHNOLOGY NEEDS OF THE FINANCE DEPARTMENT

Jennifer Sims, Senior Consultant at Xledger

 

The world of finance software is evolving quickly, but with many new software contenders entering the market it can be a mindfield for organisations. Many finance teams are already using multiple accounting apps and software packages for bookkeeping, payroll and invoicing to service individual needs. Whilst it may work fine for now, this segregated approach isn’t sustainable for long-term growth. The world is swiftly moving to agile, automated ways of working. As a result, there is a growing need to choose suppliers that can fulfil multiple functionalities within the one platform.

Financial software is evolving at such a pace that it can be difficult to keep up. Changing up a finance solution is a big step and ease of migration can be a substantial factor in determining which solution provider to go with. But how do you choose a solution that will grow with your business and still offer something innovative in five or ten years down the line? The fear is always that non-techie organisations will end up falling behind, but in such a highly concentrated industry, how do you decide which solution would work best for you?

 

Cloud-first: the term that makes all the difference 

You could find a ‘cloud-based’ service with an application that comes with automated audit trails to make it easier to meet compliance and record-keeping obligations, for example. But for a solution to offer all of the many future benefits promised by the cloud, it needs to have been built specifically for a cloud environemt from the outset – ie. not an on-premise built system that has been later adapted. Cloud-first services (true cloud) were always intended to leverage economies of scale, cope with live updates, be accessible from anywhere with an internet connection, and to scale rapidly, to name just a few of the many benefits.

When we talk about innovation in financial technology, we’re not just talking about software that makes it easier for the financial controller to create reports. If eliminating reliance on Excel spreadsheets is the only tangible benefit you have to really shout about, you are missing out on the real deal. With ‘true’ cloud finance software the sky is the limit.

Finance and accounting technology needs to directly meet the needs of the finance function and support the wider business needs.  When looking at accounting software platforms you’d be hard pressed to find one that doesn’t now promise ‘cloud-based’ enterprise resource planning (ERP) capabilities. The cloud is nothing new, but it’s the way that a solution harnesses this environment that makes a real difference. And here is where there is a need to read between the lines.

 

Automate more with true cloud 

Historically, repetitive and manual tasks are typical of the finance role – from invoice postings to expense claims handling – these can overwhelm the finance team. Research by Xledger[1] has found that an enormous 91% of CFOs and finance decision makers are carrying out at least one of these repetitive tasks as part of their job. What’s more, senior finance leads are averaging a whopping 25 hours per week carrying out repetitive and manual tasks, compared with 15 hours for other finance decision makers.

A modern, true cloud finance system can enable your business to automate repetitive tasks and provide one source of truth so that teams can make informed business decisions that will help to scale a business. Bank reconciliation, dashboard creation and reporting are just some of the tasks that can be handled automatically.These capabilities are aiding overtasked finance teams and saving hundreds or thousands of hours a year.

Whilst different companies are at different stages in their digital transformation what is clear is keeping up with the latest technology is fundamental to the future success of an organisation.

Xledger is a true cloud finance solution. The basics include invoicing, robust general ledger accounting, detailed slice and dice reporting, purchase orders, billing, VAT reporting, and cash and bank payments. It also adds process and structure to the enterprise with procurement and inventory, budgeting and forecasting, and project accounting. Users are always on the latest version of the software and with regulation more stringent than ever today, Xledger is ISO 27001 accredited.

Choosing the right provider for your financial ERP solution comes down to whether it has the fundamentals right. When hosting all of your vital data in the providers’ own servers, it should evidence a highly tested security process that comes with backup services as standard.

As our demand for technology capabilities grows and as ERP models progress, innovation will become the structure for growth – and there is no end to the possibilities.

 

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