Striking a match Commercial Sense Limited

Terry Dean Director Commercial Sense Limited

Isuspect like many of my NACFB colleagues across the commercial finance broker community, my day starts with a read through of the NACFB’s Morning Briefing on my mobile phone.

Why do I do this? Perhaps there is a bit of insecurity there, in that I like the fact that I'm still connected to a much bigger world of information, despite the fact that our brokerage is small, albeit perfectly formed. However, much more important is the ability to quickly switch on and connect to what’s important in the fast-paced and ever evolving world of SME finance and the challenging economic backdrop in which it exists.

One such article caught my attention recently, which detailed the results of a survey, commissioned by Hitachi, where it stated: “61% of SMEs are looking to cut costs, up from 39% at the start of the year. The number of smaller firms targeting cashflow improvements as a priority rose from 22% to 32%, while those reviewing their borrowing commitments nearly doubled to 21%.”

Rather than nodding sagely in agreement and moving onto the next article, on this occasion it made me pause and challenge myself to ask, am I doing enough with my clients to support this important change of focus?

Such self-reflection, is something I try to do regularly, as I have done through my career in financial services, always trying to remember that it’s the client that pays my bills. This was much easier when I was salaried, but now much more sharply in focus, given I’m responsible for generating and collecting the income myself. Actually little has changed, in that I still try to give the best advice possible and adopt the role of trusted advisor the only difference being I now access a much wider range of products and services to support clients in their cost saving ambitions.

Again, a timely reminder that during the current crisis, am I holding myself true to the principle of being a trusted advisor by following my own five golden rules:

1. Pursue a relationship, not a transaction;

2. Bebothinterestedandinterestinganddon’tbeafraidtooffer up opinions and suggestions, especially those that add value to the client and not yourself;

3. Question whether the want is really the need, if you can satisfy both then job done;

4. Deliver on your promises, whilst communicating professionally along the way;

5. Be consistent in your behaviours, especially in an inconsistent market;

6. Be credible, honest and reliable;

7. Andfinally,learntocount!

So, what can we do as a broker community? Firstly, we can assist our clients in the search for new debt, to make sure they get a choice of appropriate funding solutions, explaining clearly and simply the pros and cons of each finance offer – this is the minimum we should all do – and dare I say the principle reason we exist.

However, we are finding more and more that the debt a client already has may no longer be fit for purpose and the Ts and Cs, which whilst relevant in the past, may not be appropriate now. How many of us sit down with clients and review facility letters in detail and advise on potential risks, future breaches, and potential pricing impacts?

Indeed, the pricing of past debt may have been appropriate at the point it was drawn, perhaps when serviceability was not as strong or proven with LTVs much higher, but is it still appropriate today? Possibly the best service we can provide is to identify debt that has been taken and benchmark it against today’s marketplace. If it is expensive, work with the client to refinance it. Where we find that the funds in place are cheap, the advice should then be to ‘hang onto it for dear life’ – perhaps over time CBILS and BBLS will fall into this latter category.

Reflecting again as I write this, I’m sure we still haven’t done enough and should strive to do more, so if you have any good ideas or want to know more about what we have done, I’m always happy to hear from my fellow professionals.

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