The F Word in our industry is FRAUD.
For as long as money is changing hands there are people (or organisations) that will find a way to cheat the system. Fraud will never be fully eradicated and as quickly as technology develops, fraudsters will find a way to manipulate it.
The Covid pandemic has been something of a gift to them. The many schemes offered by the government provided a perfect opportunity for abuse and the Treasury announced in January that it has written off £4.3billion which will affect all of us as tax payers.
The ripples of fraud are far reaching. A recent fraud has cost our industry in the region of £180million of losses; this will make underwriters more cautious and it will in turn become increasingly difficult for genuine businesses to obtain funding. Some responsibility has to lie with the introducers – there is an element of human error here. Traditional ‘sniff tests’ were ignored, perhaps some procedures weren’t followed due to covid restrictions, or the big numbers were too good to miss out on but there is a simple rule of thumb – if something seems too good to be true, it usually is.
Fraud on this scale is thankfully rare but there are a lot of smaller instances and the most common scam is a simple case of identity theft. The responsibility to prevent fraud is a shared one: We can all work harder to avoid falling victim and as business owners there are steps we can all take to protect ourselves and our companies
We’ve almost reached the end of the year and what a year it’s been! Many will be glad to see the back of 2020 but before it goes, it’s worth remembering that Annual Investment Allowance runs January to December so there is a little bit of time left to take full advantage of this year’s benefit. It was great to see the CBILS facility being extended and furlough too at the beginning of the month, and it made absolute sense when two weeks later, the government announced that AIA would stay at £1m for 2021
Admittedly 2020 has been a peculiar year; it’s been challenging for many business owners with so much uncertainty around us and quite often large purchases are put on the back burner, but now could be the right time to buy. If you are in a position to make a purchase in the current climate, you may find that you are in a position of power. There is likely to be more room than usual to negotiate on price or spec of equipment – it might be that you can secure a much greater discount than you could 12 months ago. Not only that, but as AIA runs with calendar years, you can still take advantage of any remaining allowance before the year ends so regardless of when your financial year stops, now might just be the right time for you to invest in your business.
Don’t let concerns about cash reserves hold you back: you can arrange a Hire Purchase facility to buy equipment, and if you qualify this can be done in conjunction with CBILS to achieve even greater savings. This is a great way to take full advantage of the support available to businesses in the current climate, the generous AIA and also spread the cost of the goods over a period that suits your budget.
Get in touch now to discuss how we can help you to achieve fantastic results for your business, even in these trying times…
If you sell goods or services to another business then invoice finance is probably something you’re already familiar with.
Your bank may have recommended it to you or an associate mentioned that they’ve had experience of it. Sadly, there is still quite a bit of negative press around invoice finance but despite this, it remains as one of the most popular alternative finance options with over 45,000 UK business using it to support their cashflow.
Why Is It So Popular?
Invoice Finance is popular because it allows a company to release cash tied up in unpaid invoices. It’s simple really…more and more companies demand longer payment terms and businesses find themselves waiting for anything up to 120 days for invoices to be settled. Long payment terms even though pre agreed, put a huge squeeze on cash flow and make forecasting and budgeting extremely difficult, which is why releasing that cash at the point of invoice is so beneficial. Invoice Finance has some appealing benefits:
How Does It Work?
You provide goods or services, agree payment terms and raise an invoice
Once invoiced, you notify your chosen provider who will release typically 85% of the value of the invoice to you.
The remaining 15% you receive when the original invoice has been paid in full by the client.
What Does It Cost?
Costs vary depending on product and provider but there are two fees to consider:
Service Charge – this is a monthly fee based on turnover of the business which pays for the facility and for other administrative costs associated with it
Discount Charge – this is the interest you will pay for borrowing the money over a given period of time
Food For Thought
If you have noticed that new clients require longer terms than you’re used to or more of your time is being spent re negotiating payment terms with existing clients, now is the time to talk to a provider about the options available to you. As with all things – shop around; learn as much as you can before signing on the dotted line and question everything to make sure you’re getting the right deal for your business. In some instances, a provider might need to put a charge against the business which depending on your long-term plans, might not be suitable and remember, it’s not always the cheapest provider that is best. Often, it’s the speed and simplicity with which they work, the amount of cash they can raise and the amount of time they will save you that holds most value.
It’s one of the more positive sayings that has been used a lot lately, and one that the team at Latitude believes to be true. We see many commonalities during difficult economic times and one of the better ones that is almost guaranteed, is individuals finding their entrepreneurial spirit.
After the crash in ‘08, we saw a number of start-up companies emerge. From surveyors to beauty salons, plumbers to physios. Highly skilled individuals who had found themselves out of work through no fault of their own, deciding to control the situation and seize the chance to be their own boss.
It’s the kind of spirit that makes our economy great but it isn’t for the faint hearted and sadly the statistics don’t always favour the brave. Having taken the plunge starting our own company last year, as well as having the insight from a funding perspective, here are our thoughts on how to make sure your business has the best possible chance of survival:
Under cook your projections
However many clients have promised you work-reduce it. Work on worst case scenarios. If you’re relying on one client only, do your due diligence-are they financially stable, do they pay on time. Factor in not getting paid-what’s your back up plan/how will you chase that money?
Strip back your personal costs
You are no longer salaried. There are no guarantees so live frugally. Obvious items are TV subscriptions, swapping utility companies, reviewing insurance but there’s other things like the food you eat-planning menus and sticking to them can save a fortune. Don’t sacrifice your health but look at alternative gym memberships, there are lots of offers on and independents that run pay as you go classes. Don’t forget running and walking is still free!
Be prepared for long hours
The day job carries on but you now need to factor in time for items like accounting and marketing. This can’t eat into your cash generative hours so evenings and weekends will become the norm. If you have a significant other, make sure they’re on board with this.
The marketing and accounts you’re now doing at weekend-how do you know you’re doing it right? Teach yourself, read up on it, find free info online. You won’t become a professional but you can learn enough to get started. There’s some excellent accounting software available that can do the bulk of your monthly work.
Save your money
The first few paid invoices are exciting and a thing to celebrate but put the champagne on ice and keep that cash in the bank. We’re all going through one hell of a ‘rainy day’, cash at bank is what has saved many businesses and individuals.
Be willing to offer PG’s
You are likely to need funding and offering a guarantee is the norm. If your business is brand new, it doesn’t matter how well known and skilled you are, or how detailed your business plan is, finance companies need added security and if you’re a home owner this will come in the form of a Personal Guarantee. Don’t be offended when asked. Finance will be difficult to secure so perhaps look at hiring the equipment you need to start with.
Lean on your support network
This might be for tangible help with childcare or simply as a sounding board but it’s essential for your mental wellbeing. Knowing who you can rely on and having support can be the make or break. Not every day will be brilliant, have someone to talk through the bad bits with and the good bits too. There’s no boss to pat you on the back-find yourself a substitute!
Keep on top of your credit score
It sounds obvious but when you look for funding, until you have a few years of accounts, your personal credit will play a part. Take a look at your own report, if you score low look at ways to improve it before attempting to secure finance.
Have a goal
It’s too easy to fall into the daily churn/grind. Take time to think about what you want. Is it a lifestyle business or do you have grander plans? Can you make a positive change to how your industry currently operates, if so how, when and what will it cost you to do it? What kind of cash or investment will you need to generate to take the next step?
Every industry is different and some less saturated than others so the experience of being a new start can differ greatly, but with the right knowledge, determination and passion, you don’t need to be one of the horror stories.
The COVID-19 pandemic has been an eye opener and sadly a door closer for some businesses! Those with a rigid business model have struggled to cope with the impact and the key to trading through it has most certainly been versatility and ability to adapt to the changing environment.
One of the hardest hit industries has been hospitality but there have been some brilliant examples of entrepreneurialism and small business owners have quickly developed manageable take-away services offering a reduced menu serving their most popular dishes, quickly switching to online payments and structuring a safe delivery or pick up service. Not only have these businesses managed to continue trading but they have increased customer engagement – maintaining and growing a loyal client base, vital for when their doors finally open again.
There are a number of things that must be considered before you re-open to the public and getting them right now will give you the best chance of rebuilding your business over the coming months
One thing that will be essential when doors re-open is that your business gives people a good enough reason to venture out into the new world and one way to do this is make sure that the environment is clean, safe and welcoming. To do this there will inevitably be some expenditure required which is why it’s important to look at how you manage the cost of reopening carefully.
It might be that home delivery or take away will continue as there is a high chance that you will work on reduced covers. Working on smaller numbers can only be achieved if you can ensure that all occupied tables adhere to social distancing rules. This might mean investing new furniture and protective screening to create intimate hubs.
With less covers you might want to reconsider your kitchen layout. Are there more effective ways to prepare food which would reduce the number of staff required?
If you opt for online ordering apps this will require some investment in tablets and technology and additional measures in hygiene and sanitation will also need to be considered.
All these items cost money and one way to manage that cost is through finance. Here at Latitude we have lots of experience in the catering and hospitality sectors and structure deals that suit your business. That might be low start options that allow you to maximise the income generated once open or seasonal payments that peak with your peaks and reduce in your quieter times.
Paul Horan, Commercial Director, is highly experienced in the hospitality trade and is on hand to talk through the different options available to help budget your re-opening firstname.lastname@example.org
COVID-19 has changed a lot about how we all operate our businesses, but there has remained one constant throughout: cash is king. Here at Latitude Leasing we have been working tirelessly with customers and suppliers to help put together funding packages that support our client base during this incredibly difficult time, and as a measure of our commitment to those we work with, we have chosen to open up our own book ahead of schedule.
We’re delighted with how this has been received so far, with our very first deal going live at the start of the month. As a newly established own book lender we have none of the historical deals that other funders are now having to work through, putting us in a great position to support suppliers and end users across a broad range of sectors. We’ve retained all of our funding lines but have the autonomy and flexibility to provide fast responses, allowing suppliers to concentrate on sales and customers to focus on key areas of their businesses without the need to wait several days for a funding decision.
Adopting a common sense approach whilst closely following government updates, we’ve been able to help a number of businesses in the past two weeks and provided decisions in as little as 20 minutes; if you would like to know more about what we have to offer, please contact a member of our sales team who will be able to explain how we’re going above and beyond to support UK SMEs, and providing at least a little bit of the “old normal” when it’s needed most.
I have managed business through every recession since 1987. Some of those have been big – the crash in 1987, which hit just as I set up Academy Leasing, ended many businesses. Some unfairly and some prematurely.
My experience has been largely in the asset finance sector which has given me a decent insight as to what makes most businesses tick, what makes them robust enough to survive and importantly what the warning signs are. There’s an old saying – turnover for vanity, profit for sanity and over the years I have seen too many dreamers fighting for turnover and more often than not, they find themselves in a nightmare.
The difference this time round is that the impact is global. As much as the virus itself does not discriminate, neither does the impact on business. I believe that the landscape will change and if businesses continue without embracing that change, there will be more than a few casualties in the coming months.
Don’t expect it to be as easy to obtain funding for your business because many of the traditional funders have been hit as hard if not harder than you have and will need time to get back to normal. The pattern after every recession is a tightening of the credit market and this time it will be no different, so you need to be prepared and not insulted if a previous supporting lender for example is unwilling to assist or has increased the pricing. Not all of the current lenders will be around in a few months’ time and in particular the P2P platform will be under tremendous pressure.
There is a perfect opportunity to review staff and invest in technology. The latest pandemic has taught many of us that working from home is viable and often more productive, offering this as a long-term solution can reduce your office space requirements and save you money. Sadly, there will be some businesses who can no longer support the same staffing levels – job share opportunities are worth considering but don’t be afraid to make tough decisions for your survival.
We’ve also seen that some businesses have been able to adapt quickly by switching purchases to online and implementing delivery services. Adapting to the new world is key, look at the technology available. Whether you like it or not, every business is tech based now – just that some are better than others. Be one of the better ones.
Take time to look at your sales ledger and ask yourself do you really need the low margin, slow paying ones. It might seem counter-intuitive to walk away from business but think of time spent chasing unpaid invoices. The actual cost of that delay to your cashflow. Let them go elsewhere and concentrate your efforts on the ones that do pay.
Explore an invoice discounting facility – even though you think it is an expensive means of funding, this sector will still be strong and there are now many flexible, spot facilities available, so you can select the contracts that you want to apply this to. There is a cost but having cash in the bank now will outweigh that cost.
Get your company cars under control either by outsourcing or paying a car allowance to essential users. Cars are an emotive perk and before you know it everyone on the scheme wants a £45K BMW. Change the scheme, look at electric options or switch to car allowance and remove yourself from the equation.
Same with commercial vehicles. Are there any that are spending too much time in the yard? It may be that spot hire or a split between ownership and rental is more efficient.
And finally, check your direct debits. You will be surprised how many photocopiers you are paying for that you no longer require!
There are many other steps to take but the aim should be to create both liquidity in the business and time to manage it going forward.
Many fall into the trap of “Business as Usual” but this time round it won’t be
As a single mum of two boys, flexible working has always been of interest to me and being able to nail the much-coveted work: life balance is one of the reasons I decided to set up my own company – in fact balance is the foundation of everything we do. Latitude Leasing is all about striking the right balance – we strive to get the best deal for our customers, our funding partners and ourselves!! We want mutual success at all levels
I was therefore particularly interested to see that the conservative MP Helen Whately, has put forward the flexible working bill to parliament this week which will make flexible working the norm and force companies to ‘opt out’ of offering it – having to cite exactly why a position or role cannot be done flexibly. Speaking in the House of Commons she said: “The 40 hour, five day working week made sense in the era of single-working households and stay-at-home mums. But it no longer reflects a reality of how many modern families want to live their lives’’. She is absolutely right and although I’m not sure that I agree wholeheartedly with the opt out version, the argument is strong and it certainly has some merit.
It’s often thought if as a female thing – to help mums juggle the kids and a job and this is often true but there are so many other people who could benefit too. I’m a mum and yes, I need flexibility to get the kids to school, to football etc but also I’m a big believer in healthy body: healthy mind and I want to be able to take time to exercise which keeps me focused and at the top of my game. Working a typical office job, plus the increasing pressure to be available 24/7 makes this almost impossible.
Men too want to be able to spend more time with their families but there is a stigma attached to asking for flexible working which we all need to get over, this is one of the good points of the ‘opt-out’ concept.
Younger employees want more flexibility because they feel they don’t have time to invest in friends and family. Now this might sound a little wishy washy and I can almost hear the shouts of ‘snowflake’ but why shouldn’t we strive to give the next generation a better balance, give them time to work on themselves, on being their best version. We have the technology to do it but need to embrace it to make it work.
Then there is the older generation. Pensions have taken a beating and a lot of older people need to work longer financially but perhaps are struggling physically – increasingly long commutes can take their toll. Rather than force them out of work – can’t we keep the knowledge and expertise in industry by offering more flexibility?
A number of research pieces have been done on the topic of flexible working and over 89% of workers believe flexibility would increase productivity. I definitely agree with this. In my previous roles, the gratitude from staff who I have been able to offer flexibility to has been immediately visible in their work.
Not having to spend two hours every day on the motorway enables people to start work sooner from their home office, so rather than being stressed out at 9am they’re relaxed and in a good head space for work
I do worry that the ‘opt out’ scenario would hamper the increased productivity though. When flexibility is earned, staff are grateful and therefore go the extra mile. If it is a given, there is no appreciation, therefore no need to give extra back.
As mentioned earlier, a lot of people need flexible working to be on offer so that they can fulfil their duties as a parent (school run, Christmas play, sports day, half term etc) and currently, these responsibilities tend to fall on the mum. Sadly, less than 10% of jobs advertised with a salary of over £20K pa offered flexible working. This means that women who have been successful, are good at what they do and have a lot to offer industry simply cannot work or have to take a job under their level. The pay gap is a hot topic and I am certain that more flexibility would assist in reducing this.
There is so much more we can do to accommodate modern living and I for one will be at the forefront of making sure all my team can benefit from it. I work hard and take pride in what I do – if I need to, I work long days, sometimes I miss the gym or can’t make the kids school assembly. That’s life, it happens but in the main I make sure I can be a good mum and a run a good business. I definitely plan to make a difference with the Latitude team as we grow. Life after all, is all about balance.