*The CBILS is not yet fully defined - this article will be updated as we learn more
How can we help?
Liquidity Club will be continually engaging with not just the CBILS partners but many commercial finance providers across the market to ensure we are up to date and able to provide solutions to our clients regardless of the changing world.
As always we would be delighted to speak with any businesses looking to raise funding and encourage proper thought on cashflow challenges that could arise in the coming months.
With SMEs currently accounting for 99.9% of the business population in the UK (5.9 million businesses)* it is crucial to support their growth and innovation. Liquidity Club understand training and development is a critical area contributing to competitive advantage and long-term resilience and have teamed up with IMPROVE to create a series of easy to use training course videos on business finance. Access to finance is vital for economic growth but many SMEs continue to struggle with how to approach this and what options are available. The training videos offer impartial guidance and essential tips on how to approach finance.
Launched by Steve Walker in November 2019, IMPROVE work with SMEs across the UK to provide over 40 online training courses covering a wide range of topics, from fire safety and manual handling to GDPR and time management for a low monthly cost.
Commercial Director, Adam Simpson, said:
“As a consultative cashflow broker, we have worked with lots of businesses, across dozens of industries at various stages within their lifecycle. On numerous occasions we have seen businesses that are keen to upskill their workforce but haven’t had a member of the team covering HR, or the budget to bring a trainer into the business for several days. Therefore, when we became aware of IMPROVE, we instantly understood the demand for their services. We are delighted to work together on the business finance side and use our expertise to provide our insight, tips and simple guides on the minefield of business finance. With so many options available it is important for SMEs to understand what solutions will best suit their business.”
“We are delighted to have launched IMPROVE and to be working alongside Adam and the team at Liquidity Club in delivering high quality, convenient education to UK SMEs.
IMPROVE aims to disrupt the training marketplace by giving owners of small and medium sized businesses the access to a suite of online course, especially tailored to help empower, develop, keep staff compliant and within budget. With our new partners Liquidity Club now involved, we will be able to extend this educational resource to cover the complex and often misunderstood topic of business finance.
We are proud to announce Liquidity Club have become Patrons of Made in the Midlands. We are delighted to join the Made Family! This article originally featured on the Made in the Midlands website here.
Based in Birmingham, Liquidity Club is a consultative finance broker, working alongside businesses to find the right finance package to suit their future plans and aspirations, or current needs. Liquidity club is driven first and foremost by what’s right for the client, working with trusted funders to support businesses.
Liquidity Club’s goal is to work with clients over the course of many years as their businesses grow and finance requirements change. They purposefully choose not to work with 150+ funders but instead focus on 20-30 funders who they can forge closer relationships with to the benefit of their clients. These funders are chosen based on their range of products, service, and reputation.
Will Mason, Associate Director for Liquidity Club, is excited to attend member’s best practice events and build relationships with those in the sector:
“Our team have been following Made in the Midlands since its launch back in 2012 and have watched the organisation grow to its current position, supporting and uniting hundreds of manufacturing sector businesses across the region.”
“The events put on are excellent and give those proactive businesses the opportunity to learn and develop whether through viewing best practice of other members, meeting potential customers or suppliers, or connecting with the patrons who can all enable further growth.”
Liquidity Club are looking forward to being part of the Made in the Midlands and helping members to grow their businesses, Will added:
“Not only do we want to continue supporting midlands business during these times of uncertainty with our thoughts and expertise, but we want to become a part of the Made in the Midlands movement hopefully adding value enabling members to grow faster or reach further with our support.”
“We also want to expand our own network of contacts across the industry to help our own clients connect with manufacturing businesses in the region that may be able to add value.”
The Made in Group was created to challenge the erosion of British manufacturing and to open a channel of communication between local firms. We are proud to have Liquidity Club as a Made in the Midlands patron.
Want to be part of Made in the Midlands and help champion the manufacturing sector?
Click the link below to find out more:
Cube Precision Engineering landed a six-figure funding deal that has enabled investment into its multi axis work that has increased turnover and led to a record order book.
Paul Varley, director at Liquidity Club, said: “I’ve known Cube Precision Engineering since its inception over ten years ago when I helped raise the finance the Management Team required to start their first phase of growth
“With all the wider economic uncertainty some businesses are being put off their plans to invest, but Liquidity Club has seen no shortage of enquiries for businesses requesting finance.”
Neil Clifton, managing director at Cube Precision Engineering added: “With so much uncertainty at the moment and the threat of a ‘no deal’ Brexit we have been determined here at Cube to operate a ‘Business as usual’ policy.
“It has been great to work with Paul Varley and through the investment brokered by Liquidity Club, which has brought an increase in profits, we have reinvested back into the business through new machines, our team, and we have focused on diversifying into new industry sectors to drive our new business development forward.
“September will be our 10th anniversary in business and this year has also been our best so far in terms of financial results. We have an ambitious plan for 2020 and the investment that we have made into both our people and machinery means that we are in a great place to push the business forward”
“While it’s important to keep an eye on the wider economic uncertainty, this shouldn’t distract from a good idea or plan – Cube are proof of this.”
Our article has featured in both The Business Desk and Business Daily.
1. My first key learning has been gaining an understanding of the financial products available to clients, and the ways in which deals can be structured according to the business’ specific circumstances. Although it has been a steep learning curve, it has also been a fantastic experience. To develop my understanding, I have read previously finalised case summaries, taken notes, asked questions and learnt from the team’s responses. Although it's been challenging at times, I am thankful to have a truly supportive and welcoming team behind me, helping each day to develop my understanding of the market and the funding solutions available to our clients.
2. My second key learning has been recognising the importance of client care and service when advising commercial clients on funding solutions. I first recognised this during my time shadowing and supporting Commercial Director Adam Simpson with his day to day activities. Based in the North, Adam supports businesses by assessing and recommending the appropriate funders to provide cashflow solutions to suit their needs. From the very beginning, it has been clear that Adam’s number one objective is to do right by his clients and introducers.
During my time working alongside Adam I have attended client meetings, written up case summaries, liaised with both lenders & clients on live cases and most importantly asked questions. All of which has been vitally important during this time in developing my knowledge. It has also highlighted to me the importance of both understanding your client's requirements and objectives to be able to plan out their next 18 months – 2 years’ worth of funding requirements, so that you can pair the client with a lender who will support that journey, not just the next 6 or 12 months.
3. Thirdly I have realised that building your network is key to success in this external market. Building relationships with Introducers and Clients, through networking events and introductions is something which I genuinely enjoy. It’s great working for Liquidity because you’re not only helping clients navigate through their cashflow issues you are also building a relationship with the client, lender and in most cases with the introducer who has referred the case across.
Having already begun attending networking events, building an introducer network and supporting some of Adam’s clients through the process, I am looking forward to beginning to manage and generate my own pipeline of work in the near future.
Amongst younger business owners in particular, traditional banks are a less useful resource; with 65% of businesses with decision-makers under-35 preferring to look elsewhere for funding as a first port of call. The same trend applies to business age with only 32% of those businesses under 10 years old looking to the banks first for funding, compared with over 70% of those businesses more than 35 years established.
The more worrying statistic uncovered was that 30% of businesses seeking funding would give up if not able to secure funding from their first choice lender (51% of whom would speak to banks first) despite there being potential alternatives available.
Adam Simpson, Commercial Director at Liquidity Club says that CEOs need to understand the processes in their businesses that will unlock working capital.
In any growing business cash is king. However, political uncertainty over the last three years has seen UK companies make money at a slower rate, while spending increasing amounts of working capital on the process of stockpiling. This is proving a dilemma for those CEOs who want to take their company to the next level.
Cashflow under pressure
The latest Working Capital Index report by Lloyds Bank shows that a third of firms surveyed by IHS Markit said managing working capital, in the context of political and business uncertainty was "the biggest concern for the year ahead".
Drilling down into these figures further shows that 29% of manufacturers surveyed said they were holding more stock - presumably because of any disruption caused by Brexit. Stockpiling puts company's cashflow under significant stress and is funding that could be spent on expanding the business. It also affects changes to a business's operating model. One firm mentioned in the Lloyds report said that it has established a new warehouse so that it could better manage its supply chain in Europe.
Short term gain - long term pain?
In May, the CBI Industrial Trends Survey showed that 35% of firms surveyed said their present stocks of finished goods were more than adequate, whilst 9% said they were less than adequate, giving a balance of 25% – the highest balance since March 2009 and noticeably above the long-run average (+13%).
However, there remains a dichotomy here as many firms surveyed by Lloyds expected stock to run down next year, meaning they are impacting their cashflow now for relatively short-term gains.
Stockpiling is expensive for businesses, but it did boost GDP growth in late 2018 and in the first six months of this year. However, many fear that it will have an impact on growth and GDP figures in the rest of the year. With this in mind it would not be surprise to see the UK economy experience slower growth than normal while companies use up the extra stock they now have.
Slowdown in turnover generation
The Lloyds Bank Capital Working Index shows that the near-9,000 companies that surveyed saw their combined working capital increase by almost 41% over the last four years - equivalent to £41.1bn. However, over the same period, revenue at the firms grew by only 20%, meaning that they are holding onto more working capital than is relative to their turnover.
Meanwhile, over the last three years, the report found that the average cash conversion cycle, a measure of working capital efficiency, for larger firms has increased by just over six days in the last three and at smaller firms by nearly two days.
These figures show that firms are now holding higher levels of working capital and that generating turnover is taking longer. Worryingly, SMEs are taking seven days longer to tie up cash than their larger counterparts. However, this is down from a record high of almost 12 days.
The stockpiling of goods isn't an issue that is going away in the short-term, it seems. The Working Capital Index points out that high inventory levels have hit historic highs over the last quarter.
Going back further, and Lloyds' analysis shows that over the last three years (or since the vote to leave the EU), total inventory for the firms surveyed leapt by almost £35bn, or 29.2%.
In 2016 the annual rate of growth was 12.6% but this has slowed to 5.6% in 2018. This has meant that stockpiling has been at the forefront of the mind for business owners. While many expected the political uncertainty surrounded Brexit to be over by now and these stocks to have run down, a Catch 22 situation has arisen with continued uncertainty meaning that the extra inventory is carrying a cost both in terms of working capital that needs financing, logistics and storage charges.
Review every option
It now seems certain that the UK will leave the EU on 31 October, but that remains the only certainty, with the outcome of the decision yet to be felt.
Preparation, then, is crucial. With cashflow and management of working capital critical over the coming months, now is the time to review your financing options and plan ahead for all eventualities post-October 2019.
Ask yourself this: do you have a full understanding of the processes in your business that will unleash the cashflow you need to make your business grow?
If the answer is no, then now is the time to take action to remedy this shortfall, as cashflow is critical when enacting change for your business.
This article has also been featured in BDaily
and Business Money
The private sector offers a much more open and rewarding environment for creativity and proactivity. Since joining Liquidity Club I have been learning from the experienced team around me getting stuck in where I can writing case studies, visiting clients and understanding their business.
I look forward meeting business owners over the coming months and begin not only supporting the team but running with my own work and ultimately servicing my own clients, particularly on the loans side of Liquidity Club. After 2 exciting months, I have started to ask the right questions and take the initiative. I know that I’ve made the right career move for me, it is true that not everyone is the same, but if you are prepared to take risks put yourself outside of your comfort zone you will only grow as a person.
My favourite part of the job so far is helping businesses of all sizes achieve their goals, survive and grow. The most difficult part is understanding all different types of finance such as Unsecured Term Loans, Asset Finance, Invoice Finance and Revolving Credit Facility. Thankfully, with the support of Liquidity Club and some hard work on my part, I am now developing a greater understanding of these products and solutions, but many business owners may not, that’s why Liquidity Club can help.
If you or your client need help finding the correct type of finance, please contact Cameron on 07949 140279.
According to the recent SME Finance Monitor released by the BVA BDRC (March 2019), the main issue facing SMEs when raising finance has now shifted from the issue of access to finance, to demand for finance amongst SMEs and the extent to which the correct forms of funding are available to those businesses looking to grow and invest.
According to the report, 36% of SMEs were using external finance in 2018 compared to a similar figure of 38% in 2018. So why is structure not a more prominent question for business owners? Has an abundance of different types of funding created choice paralysis? Or maybe there is still too much jargon and the types of products available still confuse people.
We may be slightly biased, but this is why all of us at Liquidity Club feel professional advice and guidance is so important. An expert hand can offer interpretation of the market and various products, a steer to which feels most appropriate, and the right access via a network of contacts that can help turn your business ambitions into a reality in a way that works for your business.
Recently I worked with Parisa Lian at Reward Finance Group to assist flight operator Flylolo who were experiencing growth but, due to the complex regulatory requirements of the travel industry, were experiencing cash flow challenges.
Without the right guidance Flylolo could have easily ended up with a term loan. While this ticks the box of putting extra cash in to cover the shortfall, it requires a forward view of what is needed for the full season ahead and will incur costs on the full predicted amount from day one.
By understanding the requirements in more detail, Liquidity Club advised and arranged a revolving credit facility provided by Reward Finance Group to meet the cash flow needs. Unlike a term loan, this allows Flylolo to draw cash only as needed, up to an agreed limit, defined by the business credit and risk. This is not a unique product in the market but is a fresh approach and a great strength of Reward’s offering.
By working together, we were able to provide a funding solution that supported Flylolo’s business model and enabled them to drive forward the business with confidence.
For businesses, here are some tips on what to consider when approaching an advisor and/funder for funding to support your growth plans:
- Are the finance facilities you are using truly suited to the requirement? Typically working capital is better funded by revolving facilities where you can continuously draw down and repay over the term agreed.
- Are your lenders people that you can work with? Would they steer you down a better route even though it meant they earn less?
- Do they understand your business or provide experience that adds value to your operations? Do they have experience in your market, understand its dynamics and the issues?
- Will they provide the flexibility and support that you need to move forward?
- Does your finance package provide the required headroom to support growth?