Since entering the short-term lending market in mid-December 2011, Shawbrook Bank is set to begin its first complete year as an alternative lender with a bang.

The specialist savings and lending bank came to market in April 2011 after being bought by RBS Equity Finance, which allowed the business to grow. Subsequently, Shawbrook was able to buy further lending facilities, enabling the bank to develop towards its current model and branding launch in October last year.

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GE Capital, the finance arm of US industrial conglomerate GE, has posted a $6.5bn (€4.9bn) profit for 2011 – up some 107% from 2010.
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The Co-operative Bank has provided £500m (€585m) in project and asset finance to UK renewable energy projects in the past four years.

As it released the figures, which go back to 2007, the Cooperative Group’s banking division set a target to double the funding to £1bn by 2013, as part of the wider group’s corporate responsibility strategy, called Ethical Plan.

The Co-operative Bank, which prides itself as an ethical lender, has funded 108 renewable energy projects over the period with a capital value of £1m to £25m.

Projects are typically taken on by smaller developers, community groups and landowners as a means to diversify income, according to a statement from the bank released with the figures.

The projects funded include onshore wind, hydro, biomass and combined heat and power systems, and the bank has a renewable energy team to deal with planning permission and grid connection on behalf of clients.

Richard Wilcox, head of social banking at The Co-operative, said: “At a time when many communities are fighting for survival from the wider economic challenges, small to medium renewable energy schemes provide an opportunity for communities to become sustainable, creating local jobs and diversifying local economies.”

Renewable energy projects in the UK currently receive around £1.4bn a year in government support through the Renewables Obligation Certificates (ROC) scheme.

However, a review of the scheme has been delayed, which could stall renewable energy investment, Wilcox warned.

“We welcome the Government’s commitment to renewable energy investment which has helped to provide an enabling arena for our rapid growth in renewable investment,” he said.

“However, there is a real danger that this could grind to a halt if the review of ROCs and pending review of feed-in tariffs are not completed quickly and with a view to nurturing our fledgling environmental industries.”

Article contributed by: Leasing Life

Anil Stocker, Co-Founder of MarketInvoice comments “90 per cent of the business banking market is dominated by just 5 high street banks. A lack of choice in financial products and a monopoly on capital distribution has stifled UK companies’ growth plans, many of which are burdened with unreasonable costs of finance.

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Invoice finance has continued to grow in popularity for both SMEs and larger companies according to a new economic report and quarterly figures released today by the Asset Based Finance Association (ABFA). Total advances from members currently stand at £15.7bn, showing strong year-on-year growth of 12%.

This growth comes on the back of continued growth in advances over the past five quarters and shows that UK and Irish firms are increasingly opting for this type of finance over other forms of lending. The latest figures also show invoice finance clients are again choosing not to access all of the funds available to them. Total available funds this quarter were £22.2bn, with £6.5bn of finance available but not drawn.

Of the total funding provided by members, SMEs received almost 40%, or just over £4bn this quarter.  A decreasing gap in the level of advances between SMEs and businesses with turnover above £100m suggests a growing confidence amongst SMEs as they get comfortable with increasing debt levels. This is supported by total clients’ sales growing 14% over the past year to reach £59bn.

The latest ABFA economic report also shows that export and import factoring have both grown substantially, enjoying a year-on-year rise in client sales of 48% and 47% respectively. This leap in demand for import and export factoring indicates that while the UK market remains sluggish, clients are looking to customers outside of the UK to buy their products, and are choosing this type of finance to help facilitate overseas trade.

Credit protection payments by ABFA members to their clients have also continued to decline, dropping by 27% over the last year to total £4.9m, consistent with the UK-wide trend of lower default rates on loans and a stable rate of write offs. Together with the shortening average debtor day numbers both these factors reflect one of the key product benefits of asset based finance, namely introducing firmer debtor disciplines.

Kate Sharp, chief executive of the Asset Based Finance Association, said: “The figures in our new economic report indicate growing business confidence amongst invoice finance clients, both SMEs and larger firms. This contrasts markedly with the general negative sentiment concerning the state of the wider UK economy and a general contraction in the stock of lending. Firms using invoice finance are seeing rising sales and are continuing to have access to an ample supply of finance. With total client numbers rising by 244 in the last quarter, the invoice finance sector is providing much needed finance to many UK and Irish businesses and is, and will continue to be, a significant contributor to supporting the wider economic recovery.”

Article contributed by the ABFA

• In the six months to July, 67% of respondents saw an increase in the time it took customers to pay invoices
• Businesses typically take a worrying 22 days beyond agreed credit terms to pay invoices
• 84% are currently having to spend more time chasing their customers for payment than they were at the start of the year

According to the survey, two-thirds of business owners and finance directors have witnessed an increase in the time it takes customers to pay their invoices over the six months to July (67%), while only 5% have seen the situation improve. Meanwhile, UK businesses have reported that they are now waiting an average of 22 days beyond agreed credit terms to be paid by their customers.

The payment gap is widest for small businesses with a turnover of less than £500,000 – those who can least afford it. Despite extending the lowest credit terms – typically 28 days compared to 33 days among companies with turnover of more than £3m – customers took on average of 51 days to pay. This gives SMEs a typical payment gap of 24 days, more than six days longer than their larger counterparts and creating major cash flow problems during already difficult trading conditions.

More than two in five of those questioned claimed that privately owned / limited businesses were the prime culprits for late payment (43%), with anecdotal evidence that larger companies take advantage of smaller firms by enforcing their own payment terms and insisting that they override the SMEs’ terms and conditions.

Late payment on this scale is simply not sustainable and can send damaging shock waves along the supply chain. Significantly, the most common excuse for late payment was that customers are ‘waiting to be paid by their own customers’, as reported by 33%. This cycle is hard to break and can have detrimental effects on businesses whose cash reserves may not be sufficient to withstand the strains of late payment which, as a worst case scenario, can even trigger business failure.

Alex Hilton-Baird, Managing Director of Hilton-Baird Collection Services, said: “There is no doubt that the current economic climate is tough and businesses of all sizes are feeling the pinch. Our research proves what a major issue late payment is for the nation’s SMEs, with smaller businesses particularly likely to suffer bad debt. However, SMEs are not doing everything they can to help themselves in these turbulent times.

“Whilst implementing credit checks, suspending credit facilities and charging late payment interest were popular amongst respondents, our research has revealed that UK businesses appear apprehensive about using the specialist resource of a debt collection agency, with only 17% outsourcing all or part of their credit control during the first half of the year.”

Another impact of late payment is that 84% of businesses had to spend more time chasing their customers for payment over the same period. Naturally, this diverts valuable resource from the essential job of managing the business to chase payment and seek growth, as evidenced by more than one in ten even having to turn away new business (11%). Worryingly, it looks as though this issue is not going to disappear fast, as nearly a quarter admitted that they did not expect to implement any further credit management strategies in the next six months (24%).

Alex continued: “Outsourcing can be extremely beneficial and an effective method of recovering debts. We would therefore encourage SMEs to consider all of their options to overcome late payment, and not be afraid to consider outsourcing – particularly given its proven benefits.”

Article contributed by Hilton-Baird Collection Services

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For the second year running, Aldemore has scooped the Best Commercial Lender accolade at the annual Bridging & Commercial Awards. Continue Reading

After double-digit sales growth, bank-owned asset finance companies are confident about the year ahead. Nick Huber and Janet Du Chenne of Leasing Life report. Continue Reading