Invoice financing

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance Funding the recovery explained The solutions and benefits at a glance | Page 2

How we’re there for UK business every step of the way | Page 8

Success stories

Community spirit

FREE eBook download

Extraordinary people powering ahead | Page 8–11

Schools, sports, SMEs and how we’re giving back | Page 14

A digital copy of Talking Business is available online

Invoice Finance

May 2013 | rbsif.co.uk |

follow us @rbsif

A guide to Invoice Finance and Asset Based Lending

Helping to keep the wheels of British industry turning

Here to help businesses every step of the way How Invoice Finance solutions assist businesses to manage working capital, grow, turn around and evolve

PLUS: 3 iPad

Minis to

Win

Call to arms: Kate Sharp, CEO, ABFA calls for industry change | On the horizon: Economist view on the future Perspective: Martin Morrin, MD, RBS Invoice Finance, on the importance of a robust business plan

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness

Talking Business · May 2013

Invoice Finance

Contents

2

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Follow us on Twitter: @rbsif

4

5

12

16

2 Introduction Invoice Finance at a glance 3 At the heart of Britain’s business fightback 4 A new pragmatism for UK corporates Invoice Finance lighting the way

5 The Invoice Finance industry in the

numbers that matter Case study – enabling growth by acquisition

6 Question Time – six business leaders address some myths and misconceptions

7 ABFA calls for a fairer deal for smaller

Introduction Welcome to this special report, commissioned by RBS Invoice Finance.

The following pages explore the many benefits of Invoice Finance and how it can help UK businesses, both SMEs and Corporates.

If you are unfamiliar with the term Invoice Finance, the chart below sets out the three core solutions, and throughout the report you can read about our insights and how many of our clients, in a variety of sectors

across the UK, have used it to drive the success of their businesses. Whether it is access to improved cash flow or working capital when times are difficult or part of a proactive plan to grow and evolve a business, the RBS Invoice Finance teams of specialists can help create a flexible and relevant solution to suit a specific need.

I hope you find this report informative and helpful. If you would like to find out more please visit www.rbsif.co.uk or email me personally martin.morrin@rbsif.co.uk.

13 Hints & Tips for developing a key strategy How we are adding value to our clients 14 Compare and contrast – Invoice Finance

compared to overdraft Money talks – supporting tomorrow’s brightest prospects A force for good – RugbyForce community programme

15 Partnerships – Three leaders from RBS Invoice Finance explore the different relationships with accountants, brokers and debt advisors

16 Guiding you through the stormy waters – economic drivers for business and for Invoice Finance

A special report from RBS Invoice Finance, Distributed with The Daily Telegraph Written and produced by the Management Board of RBS Invoice Finance and Samantha Bell, Marketing and Communications Director Additional Editorial: Matt Potter, Head of Editorial, John Brown Media Design: Lyonsdown and DML Marketing Ltd RBS Invoice Finance Limited. Registered in England No. 662221.

Registered office: Smith House, Elmwood Avenue, Feltham, Middlesex TW13 7QD

FACTORING

INVOICE DISCOUNTING

ASSET BASED LENDING

SMEs

SMEs & Corporates

Corporates

3

3

3

Unlock the cash value of stock, plant, machinery and property

✗

✗

3

We collect payments for you – full sales ledger service

3

✗

✗

Funding grows with your business

3

3

Funding exports

3

3

Who typically uses it?

Cash injection of up to 85% of the value of your unpaid invoices paid typically within 24–48 hours

(balance, less our service charge, paid when the invoice is settled)

Protection from bad debts

3

(optional)

8,500+

businesses using

Invoice Finance

Managing Director, RBS Invoice Finance

Invoice Finance is often used as an umbrella term to describe three solutions all designed around the principles of helping to manage risk and freeing up working capital in a manageable and responsible way

8 Business Life Stages:

12 Putting clients at the heart of the strategy The case for managing risk

We also invite you to take a few moments to complete our online survey that will give invaluable insight into the working capital requirements of UK plc. www.rbsif.co.uk/ talkingbusiness Finally, I would like to thank everyone who contributed their views and stories to bring this report to life.

Invoice Finance at a glance

businesses Technophile or technophobe?

– all about FacFlow – Thrive and grow – Sustain and manage – Revive and turnaround – Evolve and change

Invoice Finance

RBS Invoice Finance

3

(optional)

3

(for inventory and invoice discounting)

3 3

(optional)

£3 billion+

advances to clients RBS Invoice Finance

Security may be required, Product fees may apply

Figures quoted correct at March 2013 RBS Invoice Finance

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Talking Business · May 2013

Invoice Finance

Find us online: rbsif.co.uk

3

At the heart of Britain’s business fightback Invoice Finance is uniquely placed to provide much-needed working capital. Martin Morrin explains

W

e’re in a broadly flat economy, and recovery seems to be taking its time. But beneath that, there’s all sorts of activity going on.

Many companies are looking to make their own growth, to invest and gain market share.

More are looking to diversify or adapt, to access new markets where growth is higher or consumers have more to spend. Others find themselves in turnaround positions, or needing to free up working capital to manage day-to-day working capital.

One thing’s clear: whatever stage they’re at, they’re all finding that obtaining credit is more challenging now than it was four years ago.

Yet Britain’s businesses have a tremendous amount of value tied up in their sales ledgers, as well as in plant and warehoused stock.

Our solutions are about making that value available to them, and making it work harder for them as they strive to reach their strategic goals.

For SMEs and corporates, that means focusing on the money coming in. Factoring unlocks the cash that’s sitting in the sales ledger. Instead of waiting 50+ days for payment, our team can

By releasing working capital, businesses get the freedom and flexibility to invest in growth

typically advance up to 85% of the value of a company’s invoice within 24–48 hours with the balance less our service charge, paid when the invoice is settled. That cash means greater negotiating power, putting you in a position to buy promptly when you see the right price, or negotiate settlement discounts on the strength of quicker payment.

Turning assets quickly can be an accelerator for businesses who want to grow, and can help stabilise cash flow. If your employees are tied up

Download a copy of this Talking Business report online at www.rbsif.co.uk/talkingbusiness with credit control, factoring can free up that resource too enabling them to concentrate on other things.

Invoice Discounting works in a similar way, only that we leave the client to collect invoices through their existing credit control system.

It’s confidential if you want it to be and it releases capital tied up in the sales ledger. We agree upfront what the expectations are around credit control, and our involvement brings fresh impetus: and I have found that cash is often collected more quickly with this structured approach.

With Asset Based Lending, the dynamic in terms of receivables is no different, but we can add stock, plant, machinery and property into the pool of assets we value and lend against.

The beauty of Asset Based Lending is that we view each of these assets together in a holistic way and look at the value that can be put to work in a business.

By releasing working capital, businesses get the freedom and flexibility to invest in growth, or to diversify into other activities that might be more difficult to finance than they used to be.

Invoice Finance can also be about giving people confidence to trade with businesses they haven’t before. We can offer credit protection, sector insight and knowledge sharing.

We have got good insight into working capital across businesses in Britain. That understanding means leverage tends to be greater than on more traditional banking products like business overdrafts. And because our modus operandi involves a deep knowledge of the individual businesses we work with, we spend time with the management, really getting to know them and their business.

RBS Invoice Finance looks to support businesses with a credible plan – for growth, evolution, dayto-day management or even for turnaround.

Where the missing ingredient is working capital, we can step in.

And right now, that puts it right at the heart of Britain’s business fightback.

Martin Morrin is the Managing Director of RBS Invoice Finance

Security may be required, Product fees may apply

3 iPad

Minis to

Win

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness

Talking Business · May 2013

4

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

A new pragmatism for British business knows that it can’t depend on a booming economy. But it is finding ways to generate its own momentum, writes Chris Hawes

T

ough times sometimes bring unexpected changes. The economy is struggling and The Bank of England anticipates 2013 at least to remain flat, probably extending into 2014.

We see this shift in mindset within the businesses we work with – to the new reality

of managing what is in front of us and not hoping or assuming short-term growth.

UK plc seems to be moving beyond the fluctuations of caution or optimism to a kind of pragmatism: until things get better, we can manage. And where there are opportunities out there, we will still seek to take them.

At the same time, the UK economy is undergoing some rebalancing; we’re getting back to the place where we make stuff and sell it. Businesses across Britain recognise that’s the way forward, and it’s interesting that so many UK companies doing well at

the moment are part of that. It’s leading Jaguar Land Rover’s strategy, and powering it into new markets. We are also seeing an increase in “onshoring”, where businesses who have moved manufacturing to low cost economies are moving back to the UK as costs of overseas labour and transport increase, and the need to be more flexible in the supply chain becomes paramount.

So while this year is not an easy one, companies are revisiting their own internal engines: looking at strategy, and at whether there’s an opportunity to refocus, or to create their own pockets of growth. They see that

UK: Getting back to the place where we make and sell stuff

growth in the macro sense begins with changes close to home; that while a rising tide can carry plans that aren’t strong and sustainable, strategies are in tune with the new reality.

I see Asset Based Lending as part of that rebalancing. It focuses on business realities, the things you can reach out and touch, and not just projections. But it’s also sensitive to change, and it’s flexible. To grow back out of recession with confidence, you need the appropriate finance structure.

While a business loan or an overdraft can cap growth, an Asset Based Lending finance

Invoice Finance lighting the way

It’s long been an ally of British business, helping companies manage cash flow and offering headroom and time to recover.

Oliver Watts explores how Invoice Finance is lighting the way Uncertainty can have a paralysing effect on businesses of all sizes, in all sectors. But there are ways to overcome it. And far from being just another way to refinance and stabilise, Invoice Finance can fund growth.

Invoice Finance can bring forward the payment cycle for companies, shrinking the time between work and payment. This gives both reassurance and flexibility, allowing them to keep trading as their invoices go through, safe in the knowledge that they have working capital at their disposal.

But businesses are increasingly finding it can also work as a strategic driver. An Invoice Finance facility provides confidence around liquidity for a client as they prepare for tender situations.

Going into a pitch with an Invoice Finance facility in place means that they can reassure a prospective client that they are in a position to get working straight away, and have enough working capital to do so.

This sort of usage can have a positive effect on your business, and enable it to go for new business opportunities it perhaps couldn’t have before, and to trade entrepreneurially. This is not a quick fix; it’s a fundamental part of a strategy that places growth at its heart.

In the same way, Invoice Finance solutions can help businesses to work with lower cost bases – not just by outsourcing credit control (factoring), but by freeing up working capital that will enable business leaders to act quickly and buy decisively when they see a low price, and to negotiate the kind of discounts for swift payment that other companies offer in a flat economy.

With credit protection wrapped around an Invoice Finance facility, businesses are also able to trade with absolute confidence within their credit limit. So it can supply the confidence businesses need to be proactive in seeking growth, as well as the capital funding they need to achieve it.

And because that funding facility can grow with them, it’s as dynamic and flexible as their strategy.

Oliver Watts, ACMA CGMA, is the Finance Director of RBS Invoice Finance

Security may be required, Product fees may apply

3 iPad

Minis to

Win

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness

Talking Business · May 2013

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

UK corporates line can grow as the business does and provide both headroom and flexibility.

That in turn brings the confidence to adapt strategy, to be entrepreneurial, and seize those opportunities as they arise.

In an Invoice Finance context, the confidence and flexibility we bring to clients means our relationship with our clients becomes far richer. We offer businesses the chance to refocus, to evolve, and to grow without fear; and we offer financial sponsors the chance to look at working with companies

in another, far more questing and rewarding way. We understand that we are in an uncertain world, and there will be bumps in the road. An Asset Based Lending facility structured in partnership with a relationship bank is well-equipped to handle these bumps because there is established knowledge of the business trust with leadership and confidence on all sides.

We help clients with information, insight into their controls, and putting more working capital at their disposal, as well

“

as exploring new markets and unfamiliar opportunities. So businesses looking to change what they do – or to accelerate what they’re already doing well in – can do it on a thinner capital base with Invoice Finance.

Chris Hawes is the Director of the Corporate Team of RBS Invoice Finance

What they said...

“I think that businesses are at last waking up to the fact that we are living in the ‘new normal’ and that a rapid emergence from recession is not likely to occur. New times mean, for many companies, the consideration of new funding strategies, especially as existing facilities, often cash flow based, expire and banks are unwilling to renew on the same basis. Asset Based Lending is now being considered by companies and their Debt Advisors as ‘Plan A’ to replace these expiring facilities in a cost-effective and efficient way. These facilities are flexible enough to fund current cash flow needs and be poised to deliver more funding when growth returns.”

Howard Smith, Associate Partner Advisory, KPMG LLP (UK) April 2013

From the size of the industry to the momentum behind factoring…

The Invoice Finance industry in the numbers that matter 42,965

56.75

average debtor days reported

by Invoice Finance clients

Client annual Turnover bands

£0 - £500k £500k+ – £1m

Total number of UK businesses using an Invoice Finance Facility as at 31st December 2012

14,635 businesses

£543 million 6,684

£572m

£1m+ – £5m

14,367

£2,940m 3,606

£5m+ – £10m

£1,947m 3,074

£10m+ – £50m

£4,401m

£50m+ – £100m

323

Over £100m

276

£16.671 billion

£1,569m

advanced against debt

£4,699m

as at 31st December 2012

The Big 6 Top six sectors that use Invoice Financing products

Distribution

Services

Manufacturing

Transport

Retail

Construction

All figures accurate as at end of Q4 2012. Source: ABFA www.abfa.org.uk Security may be required, Product fees may apply

CaseStudy

Find us online: rbsif.co.uk

Invoice Finance

5

Enabling growth by acquisition In the absence of a rising-tide economy, healthy growth is something companies are increasingly making happen for themselves. BenRiach Distillery Limited, one of Scotland’s most famous distilleries, is a case in point This spring, one of Scotland’s most renowned independent whisky distilleries embarked on a bold, yet sustainable plan for managed growth.

That plan involves organic growth and elements of mergers and acquisition, and it’s a combination that could prove popular as businesses seek to outperform the wider economy.

Ongoing growth Edinburgh-based BenRiach Distillery Limited, founded in 1898, has grown significantly in recent years, acquiring a local competitor, the GlenDronach Distillery in 2008, then setting up a five-line bottling plant in Newbridge in 2010. They also completed the acquisition of Glenglassaugh Distillery in March 2013, funding the move with an Asset Based Lending facility, provided by RBS Invoice Finance.

This latest acquisition is part of the firm’s strategy to grow the business through acquisition opportunities and organic growth. Glenglassaugh is a historic distillery located in Portsoy, Scotland.

Whisky has been produced on the site since 1875.

It produces and sells its Revival Single Malt Scotch Whisky and high quality 30 and 40 year Rare Cask Series Whisky. “Glenglassaugh Distillery is a perfect match up for BenRiach and will significantly grow our business and increase our presence as a producer of high-quality malt whisky that is enjoyed across the world,” says Billy Walker, Managing Director at BenRiach.

BenRiach’s acquisition of Glenglassaugh was made possible by RBS Invoice Finance increasing their current £27m ABL facility to £35m – a move designed to support BenRiach with investment in inventory and facilities, general capital expenditure and selective acquisitions. “The RBS Invoice Finance team has once again demonstrated its continued support and confidence in our business,” says Walker. “By extending our ABL facility, allowing us to complete this deal.”

Flexible and robust lending solution “This is a fantastic acquisition for BenRiach,” says Chris Hawes from RBS Invoice Finance, “We are delighted to support Billy with this transaction.

Asset Based Lending is a flexible and robust funding solution designed to support growth and in BenRiach’s case we have increased the funding line by £8m via the company’s receivables and inventory.

This means the facility can continue to grow postacquisition, in line with the company’s sales and thereby support Billy’s future plans to grow the business and Billy Walker, Managing Director of BenRiach consider further acquisition opportunities.”

Talking Business · May 2013

6

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

QuestionTime Could your business cover these unexpected costs?

£26,825 £9,000 The average health & safety fine is £26,825 (Health and Safety Executive) and £9,000 is the average pay out for unfair dismissal (www.justice.gov.uk 2011/12).

RBS Mentor can provide you with the employment law & HR and health & safety advice, consultancy and support you need.

You’ll feel like you have in-house experts protecting your business, every day.

To find out how we can help you safeguard your business, call 0800 970 9818 or visit rbsmentor.co.uk Minicom: 0800 634 7008

Matt Potter asks six business leaders to address some of the myths and misconceptions that surround Invoice Finance

Q

Q

Can you get a bespoke solution for a seasonal or specialised business?

A

“Yes. We found that the RBS Invoice Finance specialist team understood the nature of our business and our strategy for international growth and were able to structure a bespoke facility to help us grow our UK business and establish ourselves in the US.” Richard Ashcroft, Group Finance Director, Harvey Nash Recruitment

Q

Is Asset Based Lending primarily for small and medium-sized businesses?

A

“It is becoming more accepted as a funding route in the UK for a wide range of businesses, from smaller private companies to public companies. Asset Based Lending facilities are suited to companies with a relatively high level of tangible assets (debtors, stock, fixed assets) that can be used as a security to raise finance. Whilst typically used to finance working capital, it can also be used to fund capital expenditure or acquisitions in appropriate circumstances. This area of the debt market continues to be active due to the attraction to banks and other finance providers of lending to businesses with high levels of security.”

Nigel Birkett, Partner, Corporate Debt Advisory Service, Deloitte, UK Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www. deloitte.co.uk/about for a detailed description of the legal structure of DTTL and its member firms. Deloitte LLP is the United Kingdom member firm of DTTL.

When the economy begins to improve, will there be less requirement for Invoice Finance?

A

“The opposite is true. Recoveries put cash flows under more strain than during periods of recession.

This is where Invoice Finance comes into its own, as it can allow businesses access to funds on the strength of its asset base or of the invoices due to you from orders, and the stock and materials in which they’ve already invested.”

Stephen Boyle, Head of Group Economics, RBS

Q A

Is Invoice Finance a last resort lending option?

“Not these days. It’s a key weapon i n t he a rsena l of g row i ng, entrepreneurial companies. The fact is, many dynamic, sound and high-performing businesses are prevented from growing by restricted working capital – whether it’s tied up in invoices or stock and plant.

It may be that they experience seasonality – toy companies, for example, may produce throughout the year and recoup at Christmas. Or it may be that they need to invest over a period of time in order to expand or grow. Invoice Finance can represent a good strategic driver in these cases and I advise many of my clients to consider Invoice Finance as part of their armoury.”

Jonathan Lewis, Chartered Accountant, Partner, Reid & Co.

Q A

“Not at all. I would not sustain the growth without the factoring facility. Cash flow has been tight, but our factoring service is flexible and helped me to maximise the facility to support the growth of the business.

As sales started to increase we needed to purchase a new Mill/Turn machining centre but I didn’t realise that we could use the factoring line to access working capital to do this.”

John McKell, Managing Director, Omnitool Read more about how Omnitool worked with RBS Invoice Finance on page 9

Q

28/03/2013 14:14

Will an Invoice Finance solution mean we have to hand over the running of our company?

A

“Definitely not. I used RBS Invoice Finance when I started my business many years ago, not only to release cash flow to grow the business but also to manage my credit control, leaving me with more freedom and control over running my business, not less. I have recommended Invoice Finance to many associate businesses I’ve worked with since.”

Debra Mayfield, Managing Director, Visual Source

Security may be required, Product fees may apply

172.23 Telegraph ad 1/3 page vertical.indd 1

Is factoring for businesses in trouble?

Matt Potter is the Head of Editorial of John Brown Media

Talking Business · May 2013

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Invoice Finance

Find us online: rbsif.co.uk

ABFA calls for a fairer deal for smaller businesses

7

Technophile or technophobe?

Clients manage their RBS Invoice Finance solutions with an online interface called FacFlow. This system is fully supported by a help desk and a nationwide team of relationship managers, but how easy is the technology to use? Matt Potter asks around…

What is FacFlow?

It’s an online system similar to an online banking service. It gives you real-time insight into cash movements in your business. You can track progress, and see at a glance changes in invoice turn, and brief your accounts team accordingly.

How easy is it to use?

“I have been involved as FD in companies using Invoice Financing for 23 years and during that time have used many systems. RBS Invoice Finance FacFlow is the best of all of the systems I have used.

Its ease and functionality, particularly when balancing at month end gives FacFlow the edge over the other systems in use.”

Guy Roberts, Zenex Solar

Kate Sharp outlines her priorities for the Invoice Finance sector – and calls for change within UK plc Our value in supporting UK plc The Asset Based Finance Association (ABFA) is the trade body for the Invoice Finance and Asset Based Lending industry, representing about 95% of the sector. That makes it the voice of an industry supplying much needed liquidity to businesses across the UK and Ireland.

Defining ourselves as an industry is a priority; who we are, how we can help and what the products and services are about. The proposition is a strong one in the current climate especially because Invoice Finance is based on reality, not forecasts or historic figures; it is based on what you can feel, see and touch, not what someone says might happen in the future or what may have happened in the past. That means it’s better at supporting fundamentally strong businesses. Are you selling a good product to reliable customers, and processing invoices effectively?

If so, Invoice Finance will often allow you to unlock more value.

This makes it a strong ally for British business as it regroups.

Fundamentally, Invoice Finance works as a system of checks and balances for the business. You don’t just get finances – you get a partner who’s interested in how the business is doing, who can bring a wider perspective to bear if you need it, and in whose interest it is that your business does well.

It is more than just finance. Invoice Finance solutions can bring best

practice to the financial management of your business. The insight provided by an Invoice Finance company on credit management and invoicing, debt-turn and other key issues, combined with the use of sophisticated online monitoring tools, is like having analytics for your business. Early signals tell you if payment turn goes in the wrong direction, or your credit notes rise, and you can look into it.

This can release you to spend more time growing your business.

itself in lengthening payment terms and onerous contractual terms, and can have a significant impact on the liquidity of their suppliers.

Hilton Baird’s annual late payment survey revealed that businesses are forced to wait, well beyond agreed credit terms to be paid but we don’t see a lot of evidence of late payment interest being charged on debts outstanding.

We want to see businesses paying suppliers promptly across the board, and losing onerous and unfair terms and conditions.

And we would like the Government to look into the prohibitions on the assignment of debts. At present, it can stop a supplier getting the liquidity they need to survive.

Call for change ABFA is calling for a level playing field, a fairer deal for smaller UK businesses. At present, some larger businesses include small print in their contracts that present unnecessary obstacles to invoice financiers From across the pond supporting their suppliers.

In the US, Invoice Finance is much It is unnecessary, and it needs higher on the radar, for corporates to stop. It begins with terms on exclusivity of supply relationships, and SMEs alike. In the US it is also which is understandable; but it has often combined with lending on wider moved into areas such as preventing assets beyond just invoices – on stock, the assignment of the debts that plant and machinery and so on. It is arise under a contract. This can recognised as good business practice unfairly restrict the supplier from and a sustainable form of funding. using their own assets (the unpaid Our industry has a deserved repuinvoices representing money owed tation for being able to deliver for its to them) to raise the finance they clients when they are growing and We want to need. This can put the supplier in a also in times of trouble. We are proud difficult situation. see businesses of both of these strengths.

The reality is that these larger companies do not always pay on time paying suppliers and that large customers can inevi- promptly across tably wield significant power over Kate Sharp is the Chief smaller suppliers. This can manifest the board Executive of ABFA Security may be required, Product fees may apply

How much support do you get?

“Since moving to RBS Invoice Finance 10 months ago, my company’s finances and cash flow have never been in a better state. RBS Invoice Finance is truly a bank that recognises their clients’ needs and delivers a level of support that far surpasses our previous bank.

The FacFlow interface is a fantastic asset to the smooth running of my cash flow, and the support we have been given from our very first day has been of great value to us. We have finally found a supportive bank that we consider a valued partner to our business and we look forward to a long standing relationship with RBS Invoice Finance and our support team there. Moving to RBS Invoice Finance has had a significant positive impact on the growth and financial stability of our company.”

Jane Leahy, Trust Distribution How user friendly is it really?

“Compared to other Invoice Finance systems we have used, FacFlow is extremely user friendly and provides all of the functionality that we require.”

Ian Paveley, Ridgeway Rentals

3 iPad

Minis to

Win

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness

Talking Business · May 2013

8

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

Businesslifestage Thrive and grow Even in a flat economy, there are opportunities to grow, and businesses are looking to take advantage of them. Invoice Discounting and Factoring free up liquidity in your invoices, while Asset Based Lending takes a holistic view of your business to create a line of funding with a high degree of flexibility.

Invoice Finance is there to help business ‘every step of the way’ – through different life stages. Steve Bentley explores

Sustain and manage day-to-day cash flow Once a business is up and running, Invoice Finance products can help with the long term and day-to-day management of finances.

Flexible and revolving, these facilities enable the business leaders to concentrate on running their business safe in the knowledge that there is headroom to cope with day-to-day fluctuations.

There’s another benefit, too – Invoice Finance gives Finance Directors a focus on how long it is taking their customers to pay and an awareness of the potential risk, which enables them to manage their business in the most efficient way.

Thrive and grow

Sustain and manage

Revive and turnaround

Revive and turnaround Sudden shocks to cash flow can put even the best and steadiest businesses into difficulties. At RBS Invoice Finance, we work as a partner for many businesses in helping them to ease and manage their cash flow, and execute turnaround strategies that become roadmaps for growth. Every client’s requirements are unique. So we listen to what the client needs, and try and create something that works for them.

Evolve and change In a sluggish economy, businesses look to evolve and diversify product lines and new markets can be drivers for growth. We can support companies as they develop and explore new options.

Furthermore, when businesses are looking to change their ownership, Invoice Finance and Asset Based Lending can be used to fund management buyouts.

By leveraging existing assets within the business, and managing risks with customers, businesses can make decisions to move into new areas with confidence, in the knowledge they are supported by a flexible working capital facility.

Steve Bentley is the Regional Managing Director of RBS Invoice Finance in South West and South Wales

Evolve and change

Thriveandgrow “Helping businesses thrive and grow is the very best part of the job”, says Mark Clayton, “whether we are supporting a merger or acquisition, helping a client expand their business and provide more jobs, or enabling them to buy new machinery or stock to fulfil an order, being at the sharp end of UK business and being a part of a client’s success story gives us all an enormous amount of pride and satisfaction”.

1

2

case study

Global recruitment giant Harvey Nash has ambitious growth plans A client of RBS Invoice Finance for 10 years, recruitment giant Harvey Nash is experiencing rapid growth, both in the UK and recently the US. This growth means extra planning for the interim between all those new contracts and their payment. Debtor balances can often take a long time to turn into cash, but Invoice Finance can help solve the problem by providing businesses with the necessary cash injection to assist growth.

Harvey Nash and RBS have worked together to create such a facility. Richard Ashcroft, group Finance Director at Harvey Nash, explains: “We’re delighted with the support we’ve received from RBS Invoice Finance. The Invoice Discounting facility in the US is

highly innovative, and of great help to our business.”

Mark Cattle, Head of Corporate, London, at RBS Invoice Finance, explains how it works: “By working together with Harvey Nash we have been able to understand our client’s strategies and help fulfil them by putting in place the right financial structures.”

Cattle sees highly tailored services, such as the facility advanced to Harvey Nash, as perfect for the current economic climate.

“Lending solutions have moved beyond the conventional overdrafts and loans and we are seeing the rise of more flexible types of funding, such as Invoice Finance, coming to the fore,” he says.

3

case study

Aberdeen subsea specialist ROVOP grows with RBS Invoice Finance Subsea specialist ROVOP has been enjoying significant growth and success since its launch in 2011.

The Aberdeen-based firm provides subsea remotely operated vehicles (ROVS) which are used predominantly by the oil and gas sector, off shore wind farm construction and maintenance companies.

Steven Gray, Managing Director at ROVOP explains: “The Invoice Discounting facility has been a key enabler for us to grow the business and we have used the facility since the beginning. As a start-up it can be hard to secure working capital in the early days of growing your company but the RBS Invoice Finance team has supported us

from the start and enabled us to access this form of finance.

Invoice Discounting is great because it grows with the business.

“If our customers are slow to pay, this facility means we can still pay our staff and suppliers.

The majority of our work is in Europe and this is where we have found Invoice Discounting to be particularly useful.”

Security may be required, Product fees may apply

Mark Clayton is the Regional Managing Director of RBS Invoice Finance in London and the South East

case study

Marathon Leisure sails on with support from RBS Invoice Finance Marathon Leisure was established in May 1992 and supplies the UK and Irish marine leisure markets, operating from a 10,000 sq ft warehouse and office facility located on Hayling Island on the south coast of England.

The seasonality of the marine sector means the firm’s busy period is between April-September.

As a result Marathon Leisure needs to have access to working capital all year round to support the day-to-day running of the business and to maximise new market opportunities.

Tim Millinder, Managing Director at Marathon Leisure explains: “We have built up a strong and well respected marine distributor business with a loyal

customer base and distribute to many large brands such as Fairline and Seaview. We are innovative in our approach and welcome the partnership with RBS Invoice Finance, who has given us working capital facilities that allow us scope to grow the business in the UK and overseas. This has helped us to take advantage of new market opportunities that have arisen as a result of one of our competitors going under. By having the capital available we have been able to meet the new demand and grow our business further. The fact that RBS Invoice Finance work in partnership with our banking team is also a big plus because it means they have a complete picture of our business needs.”

Talking Business · May 2013

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Invoice Finance

Find us online: rbsif.co.uk

9

Sustainandmanage Managing cash flow with Invoice Finance John Gribbon takes a closer look

ard thinking and strategic Free your business to become forw

M

anaging day-to-day cash flow and running your accounts in a sustainable way with the flexibility and headroom to cope with fluctuations is important.

Whether that is coping with longer payment terms from customers within your supply chain or whether you’re a business needing to manage daily fluctuations, the peace of mind that an Invoice Finance facility brings is an option that many clients consider part of their business-as-usual.

In the current climate, businesses are holding on to payment, increasing their cash liquidity as much as they can within their day-to-day operations. This can put strain on their suppliers, many of whom will be smaller businesses.

Add to that the occasionally bumpy ride we’ve had over the past couple of years, and the need for SME owners to make sure their time is spent getting business and making money, and you can begin to see why, for SMEs especially, Invoice Finance is such a valuable solution.

Invoice Discounting and Factoring have the potential to release funding so business clients are not reliant on waiting for invoices to be paid by customers, in an economy when time taken to pay invoices is increasing. This can free a business up to start building excellent credit relationships with its own creditors.

Factoring can add to that by allowing you and your team to focus on what you’re best at – steering the business – while we bring our expertise to bear on your credit control. We implement processes that are so professional that some of our clients tell us we’ve transformed their relationships with their customers.

They’re no longer having to mix messages about doing more work for them with reminders about wanting to be paid, so they can really nurture the relationship safe in the knowledge that we’re leveraging our own expertise to get them paid on time.

If you’ve already got credit control covered, we can run an Invoice Discounting line that advances you the money from your debtor book, and leaves you handling credit control.

Either way, it enables the business to become forward-thinking, and strategic and can allow negotiation of more favourable terms including securing discounts for early payment.

John Gribbon is the Regional Managing Director of RBS Invoice Finance, North

4

case study

Flexible facility provides Omnitool a much-needed cash injection When one specialist manufacturer needed to finance the purchase of three new machines to support increased sales, an RBS Invoice Finance facility provided a much-needed cash injection.

But more than just working capital, the facility has opened up new business horizons.

Growth can lead to its own, very particular challenges.

Irvine-based Omnitool is a specialist in providing high-end machined components to blue chip clients in the oil and gas, renewable and nuclear sectors.

The company has grown considerably since it was set up in 2005 by Managing Director, John McKell.

It recently relocated to new premises double the size of its previous unit, and its workforce has grown from eight to 25 in the past eight years. John’s sons Kenny and Mark, now both directors, are among the 25 members of staff.

Fast growth can put working capital under pressure, though. Omnitool has been working with RBS Invoice Finance since 2008 to keep on top of cash flow, and to ensure capital is available to support the continued growth of the business.

That means RBS Invoice Finance typically advance up to 85% of the value of a company’s invoices, providing essential working capital to support day-to-day operations as well as growth. “I would not sustain the growth without the facility,” says John McKell. “Cash flow has been tight, but RBS Invoice Finance has been flexible and helped me to maximise the facility to support the growth of the business.”

In this case, Omnitool has used this facility to access capital needed to purchase new machinery – mill/turn machines – which improve

5

efficiency, offer reduced lead times and provide exceptional quality.

“As sales started to increase we needed to purchase a mill/turn machining centre,” says McKell.

“But I didn’t realise that we could use the factoring line to access working capital to do this. Angela Walker, my Relationship Manager at RBS Invoice Finance, took the time to talk to me and understand what the business needed and as a result was able to provide the funding I needed.”

The facility has lit up some intriguing paths for Omnitool’s future evolution, too. McKell and his board have found their increased capacity has put them in a space where they are able to look to potentially lucrative new markets for the company. “As a result we have now acquired three machines which have had a great impact on the business and helped to support new contract wins. We are now focused on expanding the business over the next two years and looking to target the aerospace industry.”

“Omnitool operate in a real niche sector to provide bespoke CNC machined components,” says Angela Walker, who worked closely with McKell on the facility. “They are a delightful client to work with and have enjoyed significant growth during a short period of time. By working so closely with John we were able to recognise that we could use the facility to support the purchase of the new machinery.

We did this by increasing slightly the Initial Prepayment (IP) which is the maximum percentage value of invoices available for Omnitool to draw in advance. As a result Omnitool was able to achieve what it wanted and this has already had a positive impact on the future sales of the business by improving efficiency.”

case study

Speedy Hire sustain its business with an Asset Based Lending Facility For larger corporates Asset Based Lending can also be used to manage day-to-day requirements and give enough flexibility and working capital to still plan for growth.

Equipment hire firm Speedy Hire is a great example.

With more than twice the market share of its nearest competitor, Speedy Hire plc is the dominant force in UK tool and equipment hire. But CEO Steve Corcoran has a dynamic strategy for growth, driven by equipment upgrades and focusing on key customers.

This is the sort of medium-term investment that standard loans can sometimes restrict, so Speedy Hire chose an ABL facility provided by an RBS-led group.

The facility will enable the company to invest in its plant and machinery fleet.

“ABL is a highly flexible form of finance,” explains John Corker, Director RBS Corporate & Institutional Banking. “It enables businesses to manage through the economic cycle and provides the working capital to support future plans.”

“We are delighted with the ABL facility,” agrees Corcoran. “The support of our banks in providing the facility is a great vote of confidence. It illustrates both the strength of our balance sheet and the quality of our asset base.”

This means Speedy Hire can focus on serving the needs of equipment hire customers across Britain.

“We now have certainty with regard to our medium-term funding,” says Corcoran.“ This is another key step in our recovery and growth strategy.”

Download a copy of this Talking Business report online at www.rbsif.co.uk/talkingbusiness

Security may be required, Product fees may apply

Talking Business · May 2013

10

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

Reviveandturnaround John Hunter explains how RBS Invoice Finance plays a key role in turnarounds

6

I

t’s a fact of life, particularly in these difficult economic times, that plenty of good, well-performing businesses experience cash flow difficulties. And turnaround situations are something we specialise in helping clients with.

Turnarounds are just that – they’re not about insolvency; they’re about creating stability and enabling recovery. We support that, not just through funding, but by providing expertise. And because we know our clients are sound businesses, we’re looking to turn them around and work with them for years to come.

When video game retailer Game went into receivership, we worked with a small supplier business for whom Game was a main debtor. This business was strong, well run, and profitable; yet overnight, it was looking at going bust for reasons outside its control. So we gave the Board the support they needed to stabilise, and to come back from that financial shock, and turned them around.

We get to know our clients and their businesses, so there are no shocks, and a mutual trust is built. If things get wobbly for them, they get access to a specialist Relationship Manager whose expertise is in turnarounds, and whose mission is simple: to bring the business back to stability and growth.

We’re not just helping the UK economy; we’re supporting businesses through their lifecycle.

Actually, as long as they’re fundamentally healthy, we bring forward the cash cycle for businesses by advancing the cash from the sales ledger or other business assets to improve their cash flow.

And that – apart from being great news for those businesses we turnaround – means stimulating the whole working capital cycle, and keeping British businesses on their feet.

case study

Turnaround success: Hymid Multi Shot Ltd Even the best business sometimes needs support. One south-west business found itself in choppy waters in the wake of the 2008 financial crisis. The turnaround that followed has seen it become one of the region’s brightest success stories.

Today, Hymid is a local business success story.

But back in 2008 things looked very different, as the Torquay-based business struggled with tough trading conditions.

The picture of a successful and growing business, Hymid Multi Shot Ltd is one of only eight companies in the UK that provides two-shot injection moulding. It supplies businesses across Britain and further afield, in industries as diverse as medical, instrument measurement and electronics. But in 2008, this fundamentally healthy, well-run company found itself caught out by the sudden economic downturn.

At this point, Colin Spencer Halsey – now the company’s Chief Executive – was invited into the business to work alongside its founder members to review Hymid’s financial and business performance. Colin used his extensive business experience to review the firm’s finances and day-to-day cash management. Hymid duly turned to RBS Invoice Finance to assist them with their working capital requirements through the provision of an Invoice Finance facility – and the turnaround began.

Debtor balances are a huge asset for companies but it can often take too long to turn these into cash. Invoice Finance allows a business to immediately realise the cash benefit of its sales, and can be used as a flexible way to raise funds. Today, Colin Spencer Halsey explains the critical role it played as he sought to turn the business around.

“The Invoice Finance facility has been instrumental in supporting Hymid’s transformation and continued growth,” he says. “It forms part of our overall finance package and was implemented when the business was incurring serious trading problems

in 2008. The Invoice Finance facility has proven to be right for the business and we have used it as a platform from which to grow.

It has enabled us to be very diligent in terms of our financial discipline and contributed to the success we are now enjoying.”

And Hymid is enjoying success indeed: it won the 2012 Institution of Mechanical Engineers Manufacturing Excellence Award for Business Development and Change Management Process.

The company is also a finalist in the Herald Express South Devon Business Excellence Awards in not one, but two categories: Business Growth and Sales & Marketing. It was also a 2012 finalist in the ICAEW and NatWest Finance for the Future Awards.

Spencer Halsey is now keen to focus on the future. “We have a very aggressive growth plan,” he says. “We are looking to expand further now we have moved into new premises to accommodate this. We are also investing in automation, and looking to add to our apprenticeship scheme as well as enhancing the firm’s promotional activity.

It’s fair to say that the confidence we have in developing and strengthening the business has been assisted by the Invoice Finance facility, which continues to provide working capital to assist our growth plans in the year ahead.”

Hymid’s Relationship Manager at RBS Invoice Finance, Alaina Mitchell, is proud of the turnaround in fortunes. “The Invoice Finance solution has been very important to Hymid,” she says. “It’s proved to be the right financial solution, and helped to turn the business around. Colin has done a great job and worked well with the original owners, and all are now looking to grow significantly and embark on new investments.”

John Hunter is the Regional Managing Director of RBS Invoice Finance in the Midlands and East of England region

Colin Spencer Halsey, Chief Executive

Security may be required, Product fees may apply

3 iPad

Minis to

Win

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness

Talking Business · May 2013

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Invoice Finance

Find us online: rbsif.co.uk

11

Evolveandchange Every business needs to evolve and change at some point yet lenders often prefer well-worn paths to success. This is where Invoice Finance can play a vital role, writes Barbara Brown

M

a ny busi ne sse s a re looking to evolve, to branch out in search of new opportunity.

Yet businesses can feel their hands are tied by lack of working capital and funding.

We can help businesses to do things they haven’t done in the past.

I often talk with Directors who say, if we only had more money, that would bring the capabilit y to capitalise on the opportunities we see out there.

Where an overdraft might not give them the flexibility they need, we are able to work with them or their intermediaries to look at the whole business and offer a way forward.

This is because part of the Invoice Finance appeal is in this holistic view of the businesses it funds. That means close involvement, strong relationships, and listening to the business owners’ vision, challenges and goals. It also means looking at the strengths across the business.

There are clear benefits to this approach. Let’s say a company wants to invest in and focus on R&D, to explore a new product line. That’s generally an area it can be difficult to make a case for in terms of funding.

T his powers acquisition conversations too. It ’s Invoice Finance’s way of enabling businesses to think more entrepreneurially that really fuels those creative, opportunity spotting conversations we have every day.

Even the knowledge that we work

consultatively, creatively like that, itself brings confidence. Often clients will get in touch and say, we spoke some time ago. Well, now we’ve sourced the opportunities that we outlined, and we’d like to look at funding in detail. Invoice Finance is flexible, so they’re secure in the knowledge that we can extend a facility up to, say, 85% for an agreed period, while they need that extra firepower to cover new initiatives.

That’s very satisfying. Because it suddenly opens up whole new areas

of possibility for developing those businesses. And when they know it’s an option, they’re free to think in terms of the extra capability it offers them.

Barbara Brown is the Regional Managing Director of RBS Invoice Finance in Scotland

Part of the Invoice Finance appeal is in this holistic view of the businesses it funds

“

What they said...

Asset Based Lending has evolved to meet the needs of a more sophisticated client base over the last few years and I advise my clients to consider its flexible funding options across several asset classes, including accounts receivable, inventory, plant and machinery and property, to maximise the working capital that may be made available. The fact that these assets may be funded in several jurisdictions, particularly around Europe and the US, means it is an attractive option for my clients.

Howard Smith, Associate Partner, Advisory, KPMG LLP (UK) April 2013

7

case study

Norwich firm Secker & Sons launches radical new energy efficient product A family-run business based in Norwich is ready to target new markets and grow the business with the launch of a radical new heat reclaim system Ecotherm – which reduces costs and is environmentally friendly.

Working capital to support this growth activity has been provided

by RBS Invoice Finance, which has worked in partnership with the management team at Secker & Sons (Norwich). Alan Secker Jnr, Director Secker & Sons (Norwich),

said: “Our main focus for the year ahead is to increase sales for the Ecotherm heat reclaim system, which is designed to help our customer save money year on year on energy bills and is also environmentally friendly.

It is perfect for businesses that use refrigeration plant and demand hot water. It can save money for food processing companies such as abattoirs, breweries and butcheries. This is an exciting and innovative product

which gives us great scope to expand the business. We also are continuing to grow our air conditioning sales and build upon our experience of being one of the largest installers in Norfolk.

RBS Invoice Finance has been supportive and provides working capital facilities to support our day-to-day operations and assist with our growth strategy around the heat reclaim system.”

8

case study

Printing firm Greywell Press presses on Greywell Press is a long established print and graphics firm which was set up 30 years ago by Managing Director Peter Venning. The family-run business is based in Farnborough in Hampshire and provides specialist and bespoke printing requirements on applications including plastics and corrugated material as well as traditional printing for a variety of clients across the UK and Europe.

Peter Venning explains: “We are currently focused on expanding

the business by growing markets such as the production of hat boxes for the millinery industry and investment in new machinery and technology to keep us on the top of our game. This all requires working capital and managing cash is one of the most difficult parts of running a business. I have found the RBS Invoice Finance Invoice Discounting to be very beneficial. It has helped us to not only manage our finances but also provide the purchasing power to pay suppliers as well as

supporting growth. It also makes you really focus on sales because it affects your cash as the facility grows in line with sales. I find the online system FacFlow easy to use – you get what you need from it and even I can master it. It is also great to work with a financial provider that really understands my company and delivers real business expertise. “

Download a copy of this Talking Business report online at www.rbsif.co.uk/talkingbusiness

Security may be required, Product fees may apply

Talking Business · May 2013

Invoice Finance

BusinessDigest

12

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Follow us on Twitter: @rbsif

Invoice Finance

Putting clients at the Mark St John Qualter reviews the RBS Invoice Finance strategy and looks at the difference the right business strategy can make

H

aving a coherent strategy is fundamental to the success of your business. It comes out in everything you do, one way or another. And like it or not, when customers approach you, your strategy is the first thing they encounter.

You can build it around different things: innovation and your product, like Apple; or efficiency, and being the lowest cost provider, like Ryanair. Or you can build it around people like South West Airlines. Here at RBS Invoice Finance, we’ve built ours around the client.

This is partly because in financial services, compliance and competitiveness mean that to a certain extent, your leeway on costs and technology and thus differentiation is limited. You can work on this but it is not where the real opportunity lies for a business like ours.

But we do know our clients. We have many people in the field – in new business, relationship management and audit to name just three groups and each spend time faceto-face with clients on a regular basis.

These channels offer a tremendous opportunity for us to deliver an excellent experience to the client. And that’s what people remember and makes them want to stay with us: not products or services, but the all-round experience, as this is linked to emotions.

This strategic focus has meant we’re there for UK plc. While general business activity is behind its 2008 peak, businesses choosing Invoice Finance are up year on year over the same period. And despite new players entering the market, we’re still growing.

It also begins to resolve issues.

Only by building our strategy around the client, and delivering outstanding experiences, can we outgrow the negative baggage that sometimes comes with the market’s perception of old-style factoring; and even the feeling towards RBS in the wake of the banking crisis.

Every business strategy has to address four key areas in harmony. Customers; the business processes and infrastructure; the capabilities of the people, and how they are equipped and how they can learn and grow.

All this delivers the financial targets expected by the shareholder as an output.

RBS Invoice Finance is one of the biggest UK providers of Invoice Finance, with about 20% of the market and more than 8,500 client businesses. So where can we learn and grow?

The answer lies in our strategic focus on our clients.

All Invoice Finance businesses have an issue with retaining clients as they move

through the life cycle. We’ll only continue to be successful and help more businesses by retaining our clients. So rather than being a product that people only use when they need to – and banking isn’t something people necessarily want to engage with unless they need to – we want to be a company that can meet clients’ needs and add tangible value through their entire life cycle, as their needs evolve.

RBS Invoice Finance look to add value in many ways. We have deep knowledge of UK businesses and a great understanding of our clients’ issues and goals. So we’re putting that to work for clients. Beyond the insight we offer in person, we’re now starting to share that insight through seminars, and to prepare reports for clients, sharing our wealth of insight into working practices, payment trends and so on. We have spent time talking to our clients and understand what their expectations are at each of the touch point interactions we have with them.

Having established that, we will work to at least meet expectations at each point and

The case for managing risk Alec Rankin on why a risk strategy is essential to your business Risk, along with return, is perhaps the most important part of any business calculation.

Manage it correctly, and appetite for risk can lead to sustainable, profitable growth.

Every business has its own risk profile. But not all businesses understand the importance of risk awareness in guiding their strategy and having a stated risk appetite is a good way to get this visible and understood.

When you’re looking to grow sales in a challenging economic environment, it’s always difficult to turn business away. A risk strategy is useful because it sets down in black and white the kinds of things you will and won’t do, while you’re in the calm of strategic thought. This is essential so that you can refer everyone in the company back to it in the heat of the moment.

As a business owner, you want to be aware of the connection between your business strategy and the risk profile you are prepared to work within. That means developing a risk appetite that operates in tandem with your overall business strategy.

Developing a risk strategy By developing a risk strategy, you help to identify opportunities for development. By looking at where your risk is low, you will be able to identify the customers you want to do

more business with, or the markets you should seek to expand into. And when risk is higher, you can look to mitigate through payment terms, credit protection or balance with better pricing. Or make a conscious decision to leave it to someone else.

You may deal with people and suppliers you trust, but can you trust the people who are supplying them?

A major PLC may have a more sophisticated risk strategy than a small business, but one is essential in some form, whatever you do. The horsemeat problem has illustrated this. You may deal with people and suppliers you trust, but can you trust the people who are supplying them? A robust risk strategy will cover a range of issues, from the traditional considerations such as the creditworthiness of customers, trading partners, territories and insurance levels, to more individual issues such as the fluctuating costs of materials and currency changes. Price rises and currency risks might be things you can absorb but to what degree?

Security may be required, Product fees may apply

How alert is your business to the threat of fraud? Do you train your staff in what to look out for, keeping abreast of emerging risks? A number of recent cases have involved cheques received from new overseas buyers as payment in advance or deposits for a new order. The cheque is overstated and you are requested to refund the difference. But the original cheque then fails to clear.

Working to mitigate risk At RBS Invoice Finance we work with businesses to help mitigate some key risks.

This can include funding appropriately against a range of assets to provide adequate headroom, to credit protection, insight into the creditworthiness of prospective customers and support with effective credit control.

You’ll never eliminate risk from your business. But approach it analytically, agree your appetite and start using it as a management tool.

Alec Rankin is the Director of Portfolio Risk Management of RBS Invoice Finance

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Talking Business · May 2013

Invoice Finance

Find us online: rbsif.co.uk

13

heart of strategy We have deep knowledge of UK businesses and a great understanding of our clients’ issues and goals truly excel in the areas that our clients tell us make the most difference to them.

So our strategy takes all our experience, insight and people, and turns that into value for clients, beyond product or service.

So why isn’t it enough to just give them what they ask us for?

For any business, the ultimate goal is customer loyalty. And that only comes through great customer experiences. And that’s why we place such importance on turning clients into advocates. And, ultimately, that’s the goal of our strategy.

hints&tips Five key strategic questions for every business to consider: 1 What markets should we be in?

2 How specifically will we generate value?

3 Who are our clients and why?

4 What value propositions will we use?

5 What are our core capabilities?

Characteristics of strategic thinking:

1 Keeping an open mind to multiple perspectives 2 Working with both logic and emotion 3 Considering the future and what it could mean 4 Challenging the status quo 5 Be willing to prioritise issues

Recommended reading:

1 Good strategy/Bad strategy: The difference and why it matters, Richard Rumelt

Mark St John Qualter is the Director of Strategy of RBS Invoice Finance

2 Antifragile: Things that Gain from Disorder,

Nassim Nicholas Taleb 3 Playing to Win: How Strategy Really Works, A G Lafley and Roger L Martin

Download a copy of this Talking Business report online at www.rbsif.co.uk/talkingbusiness

How we are adding value to our clients Our solutions help businesses of all shapes and sizes manage their working capital and their risks but there’s plenty more we’re doing to help UK businesses – explains Mike Bardrick – particularly SMEs We have a wealth of real-time insight into debtor behaviour and payment cycles across the UK, and we use that to help our clients big and small manage their working capital.

We help them adopt behaviours and practices that shorten their payment cycle, free working capital and enable growth.

This sense of putting businesses in control of their working capital is key to what we do. Factoring clients can access the online interface called FacFlow, which allows them to track their payments, and upload new invoices. It updates in real time, so it’s an accurate snapshot of your cash flow at any time of the day or night. But it’s not just an online service – our help desk is busy every day helping our clients with any queries and questions and making sure everything runs smoothly.

The same commitment to service follows through in the way we work with clients.

We’ve shortened our transfer times of money being received, meaning that our clients get their money even faster – and we’re clear and

decisive working closely with them throughout, so they always have access to the information they need to steer their business, as well as the finance to grow it.

We are also looking to innovate and adapt our core solutions to meet the changing needs of our clients and the wider business community. For example, we are looking at adapting our Asset Based Lending solution – typically used by large corporates – to help smaller businesses. And this innovative approach enables us to serve the long term needs of our clients.

Aside from lending and funding businesses, RBS Group adds value through the provision of many other business services.

These include Mentor (rbsmentor.co.uk), a rich HR resource particularly relevant for those businesses without an HR function to call on and the newly launched Bizcrowd (bizcrowd.com), an online business networking tool providing an easy and affordable way for SMEs in the UK to find new customers and do business with one another.

As the Funding for Lending Scheme extends to include the Invoice Finance industry for the first time, we will explore how we can further help our clients.

Mike Bardrick is the Chief Operating Officer of RBS Invoice Finance

Security may be required, Product fees may apply

Talking Business · May 2013

14

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

Compare and contrast How does an Invoice Finance solution compare with the traditional overdraft?

Mirka Skrzypczak explores While an Invoice Finance facility and an overdraft have much in common – both can be used to support working capital requirements and can be renewed without requiring a defined repayment schedule, there are a number of critical differences to be aware of when considering your funding options and assessing which is right for your business.

Differences between Invoice Finance and an overdraft Invoice Finance funding is directly linked to the level of trading debtors, and the higher the level of debtors, in general terms the higher the availability of finance from an Invoice Finance provider – the finance grows as the business grows.

Typically, Invoice Financiers advance around 85% of the trade debtors with drawdown available to the business within 24-48 hours of submission of the approved invoices. The remaining balance of c. 15% (less fees, credit notes or any other adjustments) is then paid to the business when the invoice is settled.

This advance of working capital allows clients to manage their cash flow effectively – rather than waiting for their debtors to pay them. And with widespread media coverage citing average payment days stretching beyond agreed terms and conditions, this can make a big difference to cash availability.

Overdraft limits on the other hand are often linked directly to a businesses’ profitability, and are often set as a multiple of a profit (either net

Money talks really fired up and competitive about” said Sharon Brookes, Curriculum Leader Food & Health and Social Care, Parklands High School.

“This was a really engaging challenge for the students which they were really fired up and competitive about” Each of the businesses would learn essential commercial and management skills as they developed their strategy, developed pricing and business models, pitched their business in a presentation to the school assembly, and executed marketing pushes based on collateral they developed themselves.

The children blogged their reactions after the event. Their comments reflect how much the kids got from the first of these sessions, and the MoneySense team has many more already in the diary for later in the year based upon the positive feedback. “It would be really helpful if you aspire to run your

3 iPad

Minis to

Win

Mirka Skrzypczak is the Head of Product & Client Proposition in the RBS Invoice Finance Strategy Team

A force for good

Supporting today’s businesses is just the start. We’re also working hard to bring on tomorrow’s brightest prospects, says John Gribbon Supporting businesses through this economic cycle, and the next, is one thing. But building a robust economy for the future means cultivating sound financial and commercial skills at grass-roots level too, and in education.

MoneySense is an interactive programme for schools pioneered by RBS. Its aim is to give students the skills to manage their money so they can thrive in today’s society. The programme covers the basics of money management in four fun modules, from how to open and manage a bank account to budgeting, spending and loans; saving and planning for the future; and finances for enterprise.

The sessions are run on one day at the school by the RBS MoneySense team.

This spring, year 8 students of Parklands High School in Lancashire got a chance to start their own business i n a s i mu l ate d c om m e r c i a l environment, and sharpen their business skills as part of the a NatWest MoneySense Enterprise Day. Attended by Leanne Dawson from the RBS Invoice Finance office in Manchester, the challenge was to form teams and allocate roles as in a business, then to start their own catering companies, from scratch. The students broke into teams to get involved, and effectively ran their own imaginary businesses. They were then thrown curve balls by the team, and they had to work out how to overcome the challenges posed. “This was a really engaging challenge for the students and one which they were

or operating) and tend to be set at a fixed amount rather than being linked to the performance of the business. So whereas an Invoice Finance facility will track the sales or debtor lines and provide on-going headroom and flexibility as the business debtor book grows overdrafts can be less flexible at precisely that time your business needs some headroom to support its growth.

So it’s a ‘win win’ solution allowing the business to fund its growth and the Invoice Finance provider to work closely alongside and support.

own business in the future,” reported Lucas, a Year 8 student at Parklands who took part. “It was a really good idea to bring in the people from the bank to help us, as they really know how to manage money. It also showed me sometimes you will have to work with people who you won’t necessarily get along with, but you just have to get on.”

These are skills many fully fledged businesses often fall down on, and the high standards attained by the students is testament to the hard work and ingenuity they, their teachers and business mentors, put into it on the day.

“This is part of what we see as our role in UK plc,” says Martin Morrin, Managing Director, RBS Invoice Finance, “We can put back into the community in a number of ways, but this is a way of directly supporting tomorrow’s businesses, as well as giving the students sound commercial skills, whatever they go on to do.”

For more on how RBS MoneySense programme visit www.rbsmoneysense.co.uk/schools

RBS Group is putting communities first with an initiative that helps grass-roots rugby clubs across Britain build for the future. Mark Clayton explains Even with the Rugby 6 Nations dominating screens and stadiums this spring, RBS Group remains passionate about supporting the sport at a community level.

Since RugbyForce was launched in 2009, it has helped more than 1,000 clubs at the grassroots of the game by providing them with financial support, online guidance and tools to help co-ordinate a communitywide effort to give the club facilities a makeover.

A community initiative created by RBS Group, it is run through each of the bank’s UK territories as Ulster Bank RugbyForce in Ireland, RBS’s RugbyForce in Scotland and NatWest Rugby Force in Wales and England — in conjunction with the relevant rugby union.

To complement its existing initiative, RugbyForce is introducing a club education programme for 2013 that will help clubs become more financially viable as small businesses.

By supporting these clubs, RBS aims to strengthen the communities in which we live and work.

John Gribbon is the Regional Managing Director of RBS Invoice Finance, North

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness Security may be required, Product fees may apply

2013 will see England Coach Stuart Lancaster head-up the programme in England as the official NatWest RugbyForce figurehead.

Stuart will be looking to raise the profile of the programme and encouraging clubs to sign up to the RugbyForce weekend, which will take place over 15th and 16th June 2013.

For more on RugbyForce , including information on registering your club as part of the scheme, and how you can help clubs in the local community, visit www.rbs.com/rugbyforce.

Mark Clayton is the Regional Managing Director of RBS Invoice Finance in London and the South East

Talking Business · May 2013

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Invoice Finance

Find us online: rbsif.co.uk

Partnerships

15

Working in partnership with other parties is an important part of the service RBS Invoice Finance provides to clients. Finance Director Oliver Watts explains: “Our teams often work with a client’s other advisors. Being collaborative and transparent, flexible and easy to work with are all essential in providing the client with the best experience and business outcome.”

Three leaders from RBS Invoice Finance explore the nature of these relationships.

Oliver Watts

Barbara Brown

ACMA CGMA, Finance Director, RBS Invoice Finance

Regional Managing Director, RBS Invoice Finance, Scotland

Chris Hawes

Director, RBS Invoice Finance, Corporate Team

Category

Accountants

Brokers

Debt Advisors

What service does this party provide to the end client?

Financial advice and business strategy.

Often the accountancy firm acts as a finance department and will be asked to consider mergers, acquisitions, cash flow challenges, and major purchases.

They identify a good provider of a full solution for their client. Businesses who find it difficult to get funding in their own right often appoint an intermediary. They already have a thorough knowledge of the business and make a more confident approach. In the SME bracket, we recognise not everyone is confident coming straight to banks – one of the reasons we make education about Invoice Finance across the board a priority.

They provide a huge range of services. They understand the debt market and the full range of debt solutions on offer. They intimately understand their clients’ businesses and financing needs. With that information they are able to work pro-actively on the client’s behalf, investigating, recommending and helping execute financial strategy for the client. They’ll often act throughout the process, from suggesting a solution to negotiation.

It varies, from research and recommendation through discussions around the business need, to the facility activation. Sometimes the broker will simply hand over an initial introduction. We get together promptly with the broker, making very clear at the outset, timescales, how many parties around the table and so on. We look holistically at the whole operation, and the complexities and life stages of the deal. But it’s really important to get someone in front of them promptly.

When their client is looking for funding, or refinancing.

Asset Based Lending might come up as a solution, or working with RBS Invoice Finance specifically. We also work closely together between assignments, as it’s important we are on the same page when it comes to understanding the market, sharing success stories, and areas where we need to get better.

Often the broker will come to us, but equally it’s a two-way relationship. We work hard to develop and maintain strong relationships with brokers, and to work in collaboration with them so they achieve everything they need to for the business.

Often, the debt advisor will approach us on behalf of their client. But increasingly, clients are driving that contact, having heard about us or read about what we do, and asking their debt advisor to make contact. So advisors are getting calls from corporates asking them to educate them about Asset Based Lending, and who the leading providers are.

When do the two parties work together?

When an accountant is considering what is best for their client they come and talk to us about the flexible and low risk funding options – particularly when a business needs to move quickly to take advantage of an opportunity.

Who chooses whom?

The accountancy firm will approach us for ideas, advice and to find out how we’ve helped other businesses with the same challenges and opportunities. We run informal lunchtime learning sessions, for example. They are really beneficial to everyone. We’ll invite someone from the accountancy firm, some of their existing clients, and a client who uses Invoice Finance. We’ll hear about their challenges and aims, and share some of the ways of making Invoice Finance work against similar objectives. It’s a really good, collaborative way to enable meaningful discussions for everyone involved.

What do they need from RBS Invoice Finance?

Very simply they want us to be straightforward and transparent about what we can offer them and to have the client at heart.

How does RBS Invoice Finance help them?

Invoice Finance and the reasons for taking out these solutions has changed massively over the last few years.

Our lunchtime learning sessions reintroduce accountants to the features and benefits of the solutions, and help them think about their client’s challenge from every angle. We also offer to go in and work alongside them with their client to explain their options fully and of course we stay close through implementation of our facility to ensure that everything runs smoothly.

We help the broker by building credibility for their story. The sheer amount of hard thought and work that we put into our solutions mean they always know that they will be putting their client or prospect in touch with a highly credible organisation who can help them achieve their aims.

We can help them to add value to their clients by working together to construct bespoke solutions that are ideal for their clients. Our experience means we have a deep understanding, not just of businesses like theirs and the challenges they’re facing, but the markets they’re operating in and the pressures their suppliers and clients are facing too. We bring all of that to bear every time we work with a debt advisor, no matter what the challenge.

The team from RBS Invoice Finance in Glasgow came to our offices and took our team through a lunchtime learning session.

It was a terrific session and everyone learned something new and had food for thought!

We talked through some innovative ideas to take to some specific clients. The RBS Invoice Finance team were very collaborative and we look forward to working with them closely going forward – and we’ve already recommended to some of our clients that we all have a chat.

Derek Forsyth, Partner, Campbell Dallas LLP

We were delighted when RBS Invoice Finance decided to work exclusively with our members. The rigour and best practice our members adhere to gives business leaders confidence and peace of mind that they are getting a credible and responsible service.

The endorsement of RBS Invoice Finance – market leaders and highly respected in our industry – gives us and our members credibility to drive our best practice agenda.

Adam Tyler, Chief Executive Officer, National Association of Commercial Finance Brokers

RBS Invoice Finance is one of a number of lenders that is being supportive to businesses looking to grow. They are an established Asset Based Lender and well known in the market. We recently advised Ainscough Crane Hire, the UK’s leading mobile crane hire company in relation to its debt refinancing. RBS Invoice Finance was one of the three Asset Based Lenders selected as funding partner to the company. Over a period of months RBS Invoice Finance worked with the company and other stakeholders to achieve a successful outcome to a complex transaction.

Nigel Birkett, Partner, Corporate Debt Advisory Service, Deloitte UK

“

What they said...

I think brokers need promptness and a proactive approach. We’re clear, honest and open about what we can and can’t do from the start.

Proactive and questing on their client’s behalf to be a key part of the relationship they have with the client, and to be worthy of the relationship they’ve built up over years. They need us to be constantly reviewing and developing our proposition. Above all they need us to deliver on our promises and execute the facilities we have said we can provide.

April 2013 Security may be required, Product fees may apply

Talking Business · May 2013

16

Distributed within the Daily Telegraph, produced and published by RBS Invoice Finance and Lyonsdown who take responsibility for the contents

Invoice Finance

Follow us on Twitter: @rbsif

Invoice Finance

Guiding you through the stormy waters No tailwind… but businesses are navigating choppy waters well. Stephen Boyle on the economic drivers for business and for Invoice Finance in the weeks and months ahead

T

he backdrop to all conversations around UK plc right now is the prevailing economic headwind. Things are difficult out there. And they aren’t set to get much better just yet.

Sales growth has been very difficult for businesses across the board for the past few years. The reasons for this are many, but at the root is the simple fact that consumers are under pressure. They are indebted. Real wages are falling. Tax is going up. So if your business is consumer facing, conditions look set to remain tough for a while.

Weak export markets So what about other areas? If you’re an exporter, you’re facing weak export markets. Europe alone accounts for half of all our exports and demand there is right down. Although, now you’re getting some benefit from the weakness of the pound against the euro. Meanwhile, if you’re selling to governments, you will soon find increased pressure on volume and or margin there, if you haven’t already. And if you’re selling capital goods to other firms, that’s a difficult environment too, as many businesses are reluctant to invest.

Wherever your customers are, you haven’t got a great tailwind out there. And one’s not likely to blow in your favour any time soon.

But perhaps there is good news after all, because despite that, the UK corporate sector for once has performed well – better than other parts of the economy. They’ve largely got good management to thank. Unlike previous recessions, management acted quickly and

decisively as we entered this recession in 2008 and 2009.

Instead of cutting headcount – they cut some, but not as much as in previous downturns – they simply managed down labour and other costs.

That meant they could work through the difficult period without destroying the fabric of the business. And that’s continued to happen.

So why has UK plc reacted so differently to the way it handled previous recessions? In part, it’s because two decades on, we have the full benefits of the industrial relations reforms of the 1980s and 1990s. People and businesses are just much more flexible now.

It’s likely that business owners and employees were more aware of the gravity of the situation too, and were prepared to do what they needed to do to keep their show on the road. They wanted to keep their business functioning, not to break it up, so that led to a more managed reduction in costs. Which in turn means more of them survive, and continue to employ.

A lot of them have lessened their exposure to debt too. The result is the corporate sector is in decent shape, and cash balances are in pretty good shape in aggregate.

And record low interest rates helped cushion the effects of a weaker economy on businesses and consumers.

Pluses and minuses Yet the suspicion remains that it’s mainly larger companies enjoying those healthier cash balances. One reason for that may be the greater access they have to capital markets and they’ve

been using it – not an option for smaller and medium-sized firms.

This is an example of the pluses and minuses to being an SME in this economic climate. The great thing is that you’re very agile. It’s easier to make a small business respond, and you have a greater degree of immediate control over everything from costs to target markets.

But being agile comes at a price. The converse is that if your customers are bigger businesses, especially if there’s a high concentration of revenue beholden to large corporate customers, you’re a hostage to their payment terms. You can be doing all the right things – running a profitable business, managing your processes, suppliers, customers and people fantastically, but if you have a big customer who suddenly increases payment terms by 30 days, you’ll suffer from a shock to your working capital. And this is one role Invoice Finance, for example, can play for SMEs. One of the options open to businesses big and small is to seek out customers who aren’t facing the same pressures as domestic and European markets. And Invoice Finance can also help take some of the uncertainty out of export, especially for SMEs. One example that’s specific to Scotland nevertheless reveals the different forces at work on UK plc.

One of the things we noticed before the downturn was that exports by smaller Scottish firms were growing quite rapidly. They were proving quite successful in exporting whisky, among other things, to the world.

Since the crisis, those exports by smaller Scottish firms have fallen. But balancing that, exports by larger Scottish firms have actually risen, and it’s quite a big swing.

Part of that may be risk aversion – the world in 2013 is quite a difficult place to export to, and smaller firms often quite rightly weigh the risk of exporting to, say, Norway or Nigeria, differently.

They may not have the time or capacity to chase

If you have a big customer who suddenly increases payment terms by 30 days, you could suffer from a shock to your working capital. This is where Invoice Finance can help payment. It may also be down to funding to drive export growth or new markets.

All of this is against a backdrop of a continued weakness in the economy. And while anecdotal evidence suggests that economic recovery can put businesses under strain just as much as recession, too much growth doesn’t look like being a problem any time soon.

Stephen Boyle is the Head of Group Economics of RBS Group

Security may be required, Product fees may apply

3 iPad

Minis to

Win

RBS02996

Complete our cash flow survey online and enter the draw to WIN an iPad Mini Draw closes 31 July 2013. Terms and conditions apply and can be found online at www.rbsif.co.uk/talkingbusiness

www.rbsif.co.uk/talkingbusiness