< Previous30 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk CORPORATE FINANCE Financial lifelines Financial lifelines www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 31 CORPORATE FINANCE 32 Á A ccording to research undertaken by Xero, the cloud-based accounting software platform for SMEs, nearly fifty-two per cent of all invoices issued by small businesses are paid late. Perhaps unsurprisingly given the economic uncertainty of late, fifty-one per cent of small business owners said the problem of overdue payments has gotten worse over the past three years. Figures from the Federation of Small Businesses, meanwhile, found that late payments cost the economy £2.5 billion every year. This might become worse in the coming months thanks in no small part to the state of the economy, rising inflation and an overall worsening of many company’s cash flow positions. Invoice financing is the simplest means of releasing cash tied up in a business’s outstanding invoice. In short, it sees a business sell its invoices to a third party who will advance some of the funds it is worth up front for a cut. Thousands of businesses rely on this kind of financing to maintain a healthy cash position, whilst others use it to take back control of cashflow issues stemming from late and unpaid invoices. Perhaps the biggest draw is that businesses can be paid most of an invoice within forty-eight hours instead of the typical thirty-to-ninety-day period. As with all forms of financing, however, there are things to consider – namely the kind of invoice finance a company requires. From invoice discounting to spot factor, there’s different options, so finding the right one is key. It’s also important to look at individual providers themselves, as some will insist on managing credit control themselves which could, understandably, alienate some customers. Combined with small business loans, invoice financing can have a powerful effect and literally keep businesses trading. Invoice financing is far from the only solution businesses can utilise to maintain cashflow. Asset-based finance, for example, is a specialised method of providing companies with working capital and term loans that use accounts receivable, inventory, machinery, equipment and real estate as capital – essentially, any loan to a company is secured by one or more of that company’s assets. This option is commonly used to pay for expenses when there are gaps in a company’s cashflow, but it is also frequently used for start-up financing as well as refinancing existing loans, financing growth, mergers and acquisitions, as well as management buy-outs and management buy-ins (more on those later). Although it’s not suited to meet every business requirement, it can prove useful for those that have stretched their credit limits with vendors and reached lending capacity at the bank. Private equity, on the other hand, is where investors provide long-term equity capital investment in a company The state of the economy, rising inflation and the cost of living have all made payment of bills tricky, which is expected to cause a culture of late or unpaid invoices. We look at the options available to businesses in this situation. 32 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk CORPORATE FINANCE in return for either share, a percentage stake in the business and, in some cases, a seat on the board. The draw for businesses is that private equity can be used to finance MBOs, or to provide equity capital to support growth plans. Although many businesses might be loath to dilute their ownership, private equity does offer a good option of raising capital for businesses that aren’t ready to list on the stock exchange. For those looking for capital quickly, it’s important to bear in mind that securing private equity is often a time-consuming process and securing funds isn’t always guaranteed. Another form of private finance is an angel investor – a high net worth individual who makes use of their own personal disposable finance and defers to their own judgement about making an investment. Angels would normally take an equity stake in a business in return for providing equity funds. As well as capital, angels can also provide valuable experience, knowledge and contracts, making them especially attractive to early stage businesses or smaller businesses looking to scaleup. Every investor is different and will therefore provide differing amounts, but typical investments range from between £10,000 and £500,000, though deals of up to £2 million have been known when angels group together in syndicates. Although angels are one of the most significant investors in start-ups, that shouldn’t deter more established firms from making enquiries. It’s important to keep in mind that securing an angel can be a difficult and protracted process, as well as being harder to research and contact compared with a private equity firm. As we have already explored, capital is often sought to help fund management buy-outs (MBOs) where a company’s management team purchases the assets and operations from the current business owners. From a manager’s perspective, an MBO is an attractive option as it allows them to take the reins and enjoy greater control and freedom owning the business rather than serving as an employee. It’s equally advantageous from a seller’s point of view as it allows corporations to shed non-core divisions or for company owners to retire. A typical MBO will see a management team pooling resources to acquire all or part of the business they manage, and this financing is often comprised of personal sources, private www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 33 CORPORATE FINANCE equity and seller financing. A management buy-in (MBI), on the other hand, is where an external management team acquires a company and replaces the existing management team. In an MBO, the management team is a known quantity and therefore has a greater understanding of their business and its employees, but an outside management team will need to become acquainted with a company’s operations, as well as build up relationships with clients and staff. Faced with an end to government financial support schemes, rising energy costs, continuing uncertainty surrounding the Russian invasion of Ukraine and the cost of gas – and all that on top of a worsening late payment epidemic – it can be easy to succumb to doom and gloom. It’s simple to point out what’s wrong, harder to look for workable solutions. Yet seeking financial help and advice shouldn’t be difficult. There’s a plethora of financial experts across our region there to offer guidance and solutions to keep businesses afloat. A pension with more control A SSAS (Small Self-Administered Scheme) is a bespoke occupational pension, which is commonly used by the Directors (and family members) of SMEs to maintain more control over the investment strategy and decision-making of their pension. To set up a SSAS, there needs to be a ‘sponsoring employer’. A feature unique to SSAS is the ability to loan money back to the sponsoring employer, offering an alternative to business loans. There five specific rules that apply to these loans: • A minimum interest rate prescribed by HMRC • The loan must be used for a legitimate business purpose, like expansion • The loan must be repaid within 5 years and in equal instalments of capital and interest • The loan must not exceed 50% of the net value of the SSAS at the point the loan is drawn. • The SSAS must take a first legal charge over an asset with a value of at least the loan plus interest. The benefits of a loan back are felt by both the SSAS and the employer. For the SSAS, there will be tax-free income by way of the loan interest. For the employer, the interest paid is tax-deductible whilst a loan back can be an alternative source of finance. Both parties need to act as they would do on the open market. The loan must be fully documented. The SSAS Trustees need to ensure that the security is acceptable and repayments are made in accordance with the loan terms. Planning and realism are required to achieve the advantages of a loan back. For further information call 0333 320 9230 or visit wbrgroup.co.uk Caitlin Southall, Head of SSAS Proposition WBR Group 34 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk PUBLIC RELATIONS I t’s that time of year when we’re making resolutions. Whether health, wealth, or just plain happiness, we’re all at it. How many you’ve already broken... Of course, to do these properly, we need targets or good old ‘goals’ if you prefer and crucially, we need to know where we are starting from. This should be the case with your PR efforts too. You may have a resolution to make a more strategic effort with your PR campaign or perhaps you want to rekindle a campaign that spluttered out a little last year? Perish the thought but maybe you You may have different pressures. What about the amount of stories you started but honestly, never finished? Maybe time got the better of you or the moment passed? Perhaps you lacked a decent picture or couldn’t herd the cats into place before the news angle fizzled out? This happens a lot, don’t worry. You might measure how often your pictures got used, whether your quotes were included or check out how many brand mentions you managed to squeeze in. Many people like to consider the cost/value ratio of advertising v editorial. New Year’s resolutions - seek a fresh PRspective from the media Greg Simpson, founder of Press For Attention PR, helps you achieve your 2025 PR resolutions. didn’t do ANY PR in 2024 whatsoever. It has been known. As we all know, what gets measured gets managed. So, what might you measure with regards to your PR efforts this year and against what benchmarks? You might look at how many stories you published and issued and how many got used. This is what we call your ‘hit- rate’. How well did you do? For some, the figures will be reassuringly high. I pride myself on a 100 percent hit rate for my clients but that’s my job and I will only release stories I know will get covered and make a difference for my client. www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 35 PUBLIC RELATIONS Essentially how much you ‘paid’ in editorial resource via an agency or in-house v how much that same space would cost if bought as an advert. I do not do this, it is pretty much taboo now in PR for various reasons I won’t bore you with, but it might help as ONE metric to consider. Rather than this, I’d measure the tone of the coverage. Go for quality over quantity. Does it portray your business as you would wish? Also, was the coverage in the right place? You can compare all sorts of things and even compare versus your competitors, but the key thing is to go for something you can measure fairly easily that makes a difference to you and preferably you can check quarterly. That way you can address problems or embrace opportunities in a far more timely and effective manner. Finally, do you know what your target media thinks about you? Do they know you? Do they know exactly what you do? That research is incredibly powerful. We are offering the target media audit worth £250 as a free service throughout January and February. Get in touch if you’d like us to help you discover what your target media thinks and knows about you. A former business journalist, Greg Simpson is the author of The Small Business Guide to PR and has been recognised as one of the UK’s top 5 PR consultants, having set up Press For Attention PR in 2008. He has worked for FTSE 100 firms, charities and start-ups and conducted press conferences with Sir Richard Branson and James Caan. His background ensures a deep understanding of every facet of a successful PR campaign – from a journalist’s, client’s, and consultant’s perspective. 36 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk IT AND COMMUNICATIONS E ffective communication is vital for any organisation, and IT and telecom services allow seamless contact between employees, departments and external stakeholders. The collaboration, timely decision-making and improved productivity they offer is often enabled by the networks that may connect devices and users within and outside of an organisation. Setting up the most suitable network for your business’s communications is a great starting point when putting your IT and telecoms strategy into action. However, the choices you make in your network provisions will depend on your business needs. For instance, a LAN or Local Area Network connects devices within a limited geographic area, and is therefore well-suited for internal communications exclusive to an office building or campus. LANs are typically fast, secure, and cost-effective, making them ideal for day-to-day business operations – they can also be linked to Wide Area Networks or WANS so that multiple offices, branches or locations can stay interconnected on a global scale. Virtual Private Networks or VPNs, which are commonly used for remote access to a private network, provide a secure and encrypted communication channel suitable for remote work, telecommuting and accessing sensitive information over public networks. But perhaps the greatest flexibility is provided by cloud networks, from which applications, storage and computing power can always be accessed, provided that there’s an internet connection. For businesses that require No room for mistakes There’s nothing quite like a downed IT system to paralyse a company – showing just why it’s important to get it right straight away. www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 37 IT AND COMMUNICATIONS on-demand scalability, cost-efficiency and the ability to access resources remotely, the ability to connect anywhere offers boundless freedom. With your network set up, you can enjoy reliable connectivity between employees, departments and business locations whether by telecoms, email or video calls. Real-time collaboration keeps a workforce connected regardless of where they are, which improves teamwork, boosts productivity, and accelerates any ongoing projects. But to make traditional voice communication and telecoms even easier, making additions such as VoIP (Voice over Internet Protocol) enables voice communication over the internet instead of traditional phone lines, allowing for integration with other communication channels, such as email and instant messaging. For a more centralised approach, a unified communications or UC system instead integrates various communication channels, including voice, video, messaging and conferencing, into a single platform. By unifying communication tools, employees can access and manage all their communications from one interface, streamlining workflow and encouraging a collaborative work ethic. Providing employees with mobiles, or software that allows them to make and receive calls using their smartphones or computers, is now well-established as a means of keeping connected from home. But beyond the basic freedom of mobile working, applications can provide employees with unlimited 38 Á38 East Midlands Business Link www.eastmidlandsbusinesslink.co.uk IT AND COMMUNICATIONS access to work-related tools and communication channels. Instant messaging apps allow real-time team communication, file sharing and discussion threads, with the collaborative features of apps enabling employees to work together from anywhere. Video conferencing and virtual meetings are supported by many providers with features such as screen- sharing, chat functionality and participant management, to make webinars and presentations feel as smooth and friendly as they would in- person. When these applications are integrated with the expansiveness of cloud storage, paperwork stress can be taken off the table for truly seamless organisation that includes everyone. There are endless layers to the productivity tools that can be added on with these everyday streamlining solutions. Project management resources enable remote employees to manage tasks, track progress and collaborate on projects, with notifications, task assignment and responsive activity feeds to keep all employees on track. For capturing ideas while on the job, note-taking and documentation software are there for taking minutes on brainstorming sessions, or creating to-do lists of next steps agreed in meetings. Learning management also let staff expand on their retinue of skills with online training courses or development programs on anything from leadership and entrepreneurship to marketing and creativity. Even at the end of the day, time and expense tracking lets employees log their work hours, track project-related expenses, and submit their last reports whether on-site or remotely. These applications streamline administrative tasks, provide accurate data for billing or reimbursement, and ensure efficient time management to start off the next day with less anxiety and more fruitful optimism. When internal processes and productivity are at their best, IT and telecoms can then be turned to providing better customer experiences. Through websites, online portals and mobile apps, customers can freely and conveniently access information, make purchases, and interact with customer support staff. Opening communication channels to email, live chat and social media engagement further enable prompt customer support and personalised interactions, which all serve www.eastmidlandsbusinesslink.co.uk East Midlands Business Link 39 IT AND COMMUNICATIONS to foster loyalty and satisfaction. The integration of IT and telecom in business environments has transformed the way organisations communicate and operate, allowing all involved to stay connected internally and externally. Unbroken information flow, improved decision- making, more organised meetings and better customer experiences are only enhanced as technology continues to evolve. Keeping up with these advancements and the benefits they offer is a positive influence on any business’s potential and competitive edge. The more thoughtfully and tactfully you implement IT and telecoms systems, the more direct and beneficial dialogues with employees and customers alike will become.Next >