Research results: 20% of UK SMEs have received fraudulent references by job seekers

Figures from the latest Close Brothers Business Barometer results show that one in five UK SMEs has received a fraudulent reference for a job candidate.

Of those, over half (56%) say that it has happened up to five times in the last five years alone. Worryingly,10% have received more than 10 dishonest job references in the same time period. The survey has revealed that false references are most commonly received for mid-level (51%), and entry-level (45%) positions.

Not surprisingly, the volume of fraudulent references has a correlation with the high number of employers that are unaware of the existence of websites that charge for false references (56%).

For more details from our research and for feedback from David Thomson, CEO of Close Brothers Invoice Finance, take a look at this article - and other news items - here on the Close Brothers Invoice Finance website.

Protecting your business with bad debt protection

Another way that we are proud to stand out from the crowd is with our 100% bad debt protection service. This works alongside your invoice discounting facility and enables you to operate safe in the knowledge that you will not be affected by potential bad debts from your customers.
While most other providers only cover up to 90%, we can protect you against up to 100% of your customers, providing they are all approved by our Credit Team. But don't take our word for it, here's a testimonial from one of our BDP clients and if you like the sound of it get in touch with us now and you can have the first 6 months cover absolutely free*!

Isomass Ltd is a soundproofing company, supplying goods to the construction industry. The business has been providing a wide range of domestic and commercial building solutions since established by company directors, Iain Mair and David Bignell, in 2007.

Challenge

David and Iain had considered the funding options that would suit the size of the business and the nature of the industry they operated in. They chose a factoring arrangement with a Credit Control Team that they could trust to chase any debtors for unpaid invoices, leaving them to concentrate on growing their business.

With limited initial resources, Isomass had recognised that chasing outstanding customer invoices would burden sales at a crucial time. In addition, knowing that they would be covered if any customers had difficulties paying was seen as essential.

Solution

Close Brothers Invoice Finance provided a £75,000 factoring facility, and Isomass Ltd also took advantage of our bad debt protection product. Working alongside the factoring arrangement, this service provides essential cover against any potential loss that might otherwise not be recovered. David said, “You never know what can happen – even big companies can face financial difficulties and bad debt protection gives us peace of mind to know that the business can progress even when faced with customer insolvencies”.

Result

Since working with Close Brothers, Isomass Ltd has experienced two instances of bad debt which could have lost the business over £4,000. Besides providing cover against any credit approved customers getting into difficulty, Isomass know they can rely on the expertise at Close Brothers to help them make informed decisions about new customers.
David commented: “The team at Close Brothers Invoice Finance are great to work with and I know I can rely on them to chase my outstanding customer invoices and offer valuable advice. By allocating a percentage of my profit to the bad debt protection service, I can sleep at night, safe in the knowledge that my business is protected.”

*Terms and conditions apply

Biggest quarter ever for asset based finance as businesses borrow a record £18.9bn

Press release from the ABFA:

• Jumps 7% in three months and 10% in a year
• Largest companies account for almost a third of all advances

The three months to June 30th 2014 was the biggest ever quarter for asset based finance, with a record £18.9 billion of funding provided to businesses, says the Asset Based Finance Association (ABFA), the body representing the asset based finance industry.

According to figures from the ABFA, the combined amount of invoice finance and asset based lending provided to businesses leapt by seven per cent in the last quarter, from £17.7 billion in March 2014, and 10 per cent in the last year, from £17.3 billion in June 2013.

The ABFA says that demand has partly been fuelled by constraints on traditional lending, but that is has also gained traction as more businesses gain an understanding of how borrowing against the value of their invoices and other assets can free up cash to invest in growth.

The ABFA points out that it is not just SMEs – typically seen as the hardest hit by constraints on traditional lending - who are making use of this facility.

Almost a third (31 per cent) of the total advanced through asset based finance in the last three months was used by companies with an annual turnover of more than £100million.

The ABFA explains that 80 per cent of asset based finance is invoice finance, in which businesses secure funding against their unpaid invoices, while the other 20 per cent represents the fast-growing area of asset based lending, in which businesses can raise money secured against a range of other assets they own, including inventory, property and machinery.

Jeff Longhurst, Chief Executive of the ABFA says:

"Asset based finance is a proven tool for growth, enabling companies to increase their funding as they grow. Asset based finance is funding record levels of new jobs and business investment."

"What's becoming increasingly clear is that asset based finance such as invoice finance in particular, is the alternative to traditional lending for SMEs that the Bank of England and the Treasury have been looking for."

"We are seeing more and more businesses of all sizes and types taking advantage of invoice finance to fuel their growth, particularly as more traditional forms of lending remain subdued. More businesses are viewing their invoices as what they are – one of their biggest assets."

"Asset based lending is fast becoming a standard part of the finance suite for bigger businesses. As the economic recovery hits its stride, having funding that automatically expands with your business is a huge bonus. The ability to increase the size of your borrowing facilities as your business grows is one of the biggest strengths of asset based finance."

"That's a big plus for many businesses, because they don't have to keep re-evaluating their funding position and proving themselves to their lenders."

Amount of asset based finance advanced to businesses hits record high…

…While traditional lending to businesses falls by more than a fifth

The full statistical release, along with historical data are available at: https://www.abfa.org.uk/members/statistics.asp

Growing concern over UK’s digital skills shortage

MORE than two fifths (43 per cent) of SMEs in the UK believe that they will need enhanced or increased digital capabilities in the next three years, in order to cope with the ever-changing business landscape.

Of that number, 77 per cent are worried about how they will successfully upskill, with many firms citing difficulties finding suitably skilled staff and the level of investment required as potential stumbling blocks.

CEO of Close Brothers Invoice Finance, David Thomson, said: “Our findings suggest that many SMEs do not feel adequately equipped for the future and that many are concerned that finding staff with the appropriate skills will be a challenge.

The figures come from the latest Close Brothers Business Barometer, a quarterly survey that seeks to canvass the opinion of SME owners and managers across the UK on a range of issues that affect their business.

Mr Thomson continued: “A recent paper published by 02, The Future Digital Skills Needs of the UK Economy*, estimates that there is a requirement for almost three quarters of a million (745,000) additional workers with digital skills to meet the rising demand from employers and fuel the UK economy during the next three years.

“With this in mind, we need to explore how the UK can be prepared to compete in a digital global economy. Perhaps it is becoming necessary for businesses to look towards the younger generation to help address the growing skills gap.”

The survey also found that, of the firms who do not believe they will have any requirement for increased digital ability, 31 per cent of those do not consider digital skills as relevant to their business.

“SMEs across the board should consider the importance of digital skills in their workforce and the value these skills can bring. With £107 billion forecast to be spent online in 2014**, it is vital that SMEs are equipped for e-commerce and have the skills required to engage customers via their website or social media sites. It is clear that additional industry support is needed to deliver digital skills education in schools and also help young people into digital roles by offering more practical work experience.

“By working hand-in-hand with the government, UK firms can help to tackle this issue and ensure that we have the skills required to compete on a global level,” added Mr Thomson.

For more information and news about Close Brothers Invoice Finance please visit www.closeinvoice.co.uk

Sources
* The Future Digital Skills Needs of the UK Economy, 2013
** IMRG Capgemini e-Retail Sales Index, 2013

UK SMEs owed more than £20k in late payments on average

TWO fifths of small businesses in the UK are adversely affected by late payments, a recent survey has revealed.

Of those businesses that have experienced problems due to late payments, over half (58%) said that it impacts on their day-to-day cash flow management, 17% said it has meant they have had to rein in necessary spending and 15% say it threatens their ability to trade.

The figures come from the latest Close Brothers Business Barometer, a quarterly survey that canvasses the opinion of business owners and managers across Great Britain and Ireland.

CEO of Close Brothers Invoice Finance, David Thomson, said: “This increasing debt burden is a worrying situation for small firms. Of the businesses we spoke to that are facing problems due to unpaid invoices, 44% say that they are owed more than £20,000.

“This is constricting their cash flow and the knock-on effect is that it prevents them from being able to pay their suppliers on time, thus creating a vicious cycle.”
Mr Thomson continued: “It’s a situation that needs to be addressed, and alternative funding methods such as invoice and asset finance present a solution.

“Invoice finance works to bridge the gap between raising an invoice and receiving payment. We are actively working with local firms to raise awareness and ensure that they have access to the guidance and funding they need to manage their cash flow and make the most of the assets they have at their disposal.”

The survey also revealed that 17% of firms in the UK spend more than ten hours a month chasing unpaid bills.

“Further to the debt burden, there is the additional cost of time spent chasing up late payments. Time is often a manager’s most precious asset so it is important to make the best use of it. Invoice finance can help mitigate the time spent chasing payments and laborious month-end reconciliations.

“I encourage small businesses, particularly those who are suffering under the pressure of late payments, to reassess the funding they have in place to make sure it’s appropriate to meet their needs,” Mr Thomson added.

For more information and news about Close Brothers Invoice Finance please visit www.closeinvoice.co.uk

Late payments - a constant thorn in the side of UK SMEs

If there is one challenge that almost all of our customers site as causing them the most stress before they come to us, it is late payments.

There has been a great deal of focus on late payments in the media recently, cited as a major contributor to holding back economic recovery. Research carried out across the industry reveals that large companies in the UK are owed £6.7 billion in unpaid invoices. Suddenly that doesn’t seem like much, however, when compared with the debt of UK SMEs who are owed nearly six times as much at £39.4 billion*.

Many of our customers have chosen factoring as a solution to this problem, where our Credit Team chases any payments. This particularly suits business owners who are not comfortable comfortable, or don't feel they get results, collecting payment themselves. For those who are comfortable with the payment collection process we recommend invoice discounting.

Whether you use invoice finance or not, these 5 top tips that were put together by our in-house experts – the people who are closest to our customers – should help you to overcome late payments and keep your business moving:

1. Agree scope of work
Clearly state your costs and payment terms on the contract and ensure your client agrees before starting work
Making sure all parties are clear and in agreement before any work goes ahead will make it far easier to chase your customer once payment is due. Proof of their agreement to your terms and conditions will make your case much stronger if they cause delays.

2. Multiple forms of payment
Be open to accepting multiple forms of payment
Not accepting certain payment methods could give your customers reason to delay paying you what you are owed. Being open to multiple forms of reimbursement – ideally including credit cards – leaves your customers no excuses! Take advantage of the fact that everyone with an Internet connection has access to free cloud systems, such as PayPal. For more information, download our free guide on how cloud computing can support your business.

3. Upfront payment
Get an upfront deposit or set up a payment scheme
This involves taking a proportion of the cost before work commences and is an effective, yet reasonable way to set boundaries for your customers. The reduced balance once the work is complete may also have a positive impact on their ability to pay.

4. Terms
Stick to your payment terms
If your clients do not pay within the time limit then it is important that you follow through with your conditions. Make sure your invoices clearly state what will happen when payment is delayed, whether it means charging interest, reporting them to the relevant parties or taking legal action.

5. Prompt Payment Code (PPC)
Sign up to the Prompt Payment Code (PPC)
The Prompt Payment Code was set up by the Department for Business Innovation and Skills and encourages best practice between organisations and their suppliers. The code enables businesses to build stronger relationships with their customers and to be confident that they will be paid. Independent analysis by Experian suggests that current signatories to the Code represent over 60% of total UK supply chain value, so the Code is making a difference**.


*Research by BACS, July 2014 http://www.bacs.co.uk/Bacs/DocumentLibrary/UK_companies_face_a_late_payment_burden_of_%C2%A346.1_billion.pdf
**Matthew Hancock MP, Minister of State for Skills and Enterprise http://www.promptpaymentcode.org.uk/

Local councils lag behind Government guidance on supplier payment

Some councils are still making contractors wait 40+ days for payment

According to research by the Asset Based Finance Association (ABFA), local councils are lagging behind Central Government guidance on prompt payment of suppliers.

The results of the research reveal that local councils are currently paying their suppliers in an average of 17 days while in July 2010, Central Government departments were ordered to pay 80% of invoices within five days. In fact, some local councils are even failing to make payments to their suppliers within the 30-day payment period mandated by the Late Payment of Commercial Debt Act, which came into force in March 2013. The ABFA adds that the average wait for payment is still in excess of 40 days for some local authorities. Jeff Longhurst, Chief Executive of the ABFA, says: “Public sector organisations should be acting as role models for the private sector in paying their invoices as promptly as possible.” “Central Government bodies have performed well in hitting their prompt payment targets – many now pay more than 90% of their invoices within five days. The current average of 17 days for local councils leaves a lot of room for improvement.” “Those that fail to pay within 30 days risk damaging businesses in their local areas.”

SME subcontractors hit twice by waits for payment

SMEs are often hit twice by waits for payment when working on subcontracted projects for local authorities, as they have to wait for both the council and the main contractor to pass on payment. Research carried out by the ABFA found that SMEs are waiting 71 days on average to receive payment. Says Jeff Longhurst: “Smaller businesses brought in as subcontractors on projects for local councils are particularly vulnerable to delays in payment. As the third link in the payment chain, they often end up waiting months for their invoices to be settled.” “Local authorities need to make sure they are adding as little as possible to that wait by paying as promptly as possible and also in persuading their main contractors to pay their sub contractors quickly.”

Invoice finance can help to support cash flow for SMEs

As supported by the ABFA, invoice finance can be a vital component to assist cash flow for small businesses struggling to secure prompt payment as it gives businesses up-front advance on their unpaid invoices, regardless of the time customers take to pay. According to Jeff Longhurst, “with the economy having recovered back to pre-recession levels, there are now more opportunities for SMEs to grow, whether through purchasing machinery, expanding the workforce, taking on new customers or investing in R&D.” “A huge number of SMEs rely on outsourced work from local government bodies, but there is no reason why slow payment should become a roadblock to growth for them.” “Small businesses need to be aware of all the tools in their funding kit, including options like borrowing against their unpaid invoices, which are often their biggest asset.”


* Year end March 31

iGraphic

Every quarter we carry out a survey which canvasses the opinion of SME owners and senior management throughout the UK and Ireland on a range of issues affecting their business.


This month we have brought the results of our latest Business Barometer survey to life via our informative quick-view iGraphic called "How are SMEs feeling about the economy?" 
You can download the iGraphic by clicking on the image below:

5 top tips for SMEs dealing with growth demands

We at Close Brothers Invoice Finance help small and medium-size enterprises (SMEs) everyday to access vital working capital and support their growth.

SMEs are the driving force of the UK economy and make up a large proportion of our customer base. For that reason, we thought an article we found in Economia by Will Butler-Adams, Managing Director of Brompton Bicycle is a great read for small business owners looking for advice.

The article offers Will's 5 top tips for dealing with growth demands as a small British business.
See the full article here for tips on:

• Managing your growth step by step
• Not being afraid to ask for help
• Surrounding yourself with the right people
• Sticking to your roots

If you are a business owner with annual turnover of over £250,000 and are looking for support with cash flow and business growth, Close Brothers Invoice Finance can help.

Visit www.closeinvoice.co.uk for more information, or call one of our expert advisers free on 0808 252 0353 for a no obligations chat.

Just 16% of SME owners in the UK prefer face-to-face meetings

The results of the latest Close Brothers Business Barometer survey are in, revealing that only 16% of small business owners prefer face-to-face meetings with clients, suppliers and other contacts because of time pressures.

Half said they preferred to communicate via email and a fifth opted for talking over the phone, suggesting that these options are more time and cost-efficient.

Read the full article on StartUps here: Close Brothers Invoice Finance survey reveals businesses are losing personal touch

Lenders urged to find alternative for rejected SMEs

Finally some good news for SMEs who may have been rejected for business finance by their bank.

An article in The Times has announced that "The Chancellor is considering forcing banks to refer credit-starved small and medium-sized companies to alternative providers of finance.

"Banks are not obliged to refer an SME that they have turned down to an alternative funder. The Government is keen to make this process mandatory, potentially by introducing legislation, and intends to begin a consultation process. The announcement could be made in the Budget statement on Wednesday."

The full article can be found here (subscription required):

http://www.thetimes.co.uk/tto/business/industries/banking/article4035542.ece

Don’t let big businesses call the shots

The Federation of Small Businesses (FSB) this week revealed that from its member survey of 8,000+ companies, 51% of SMEs providing goods or services to larger private sector businesses were paid late in the last 12 months.

The FSB's research shows that late payments to SMEs can result in reduced profitability (34%), paying their own suppliers late (32%) and restricting their business growth (29%).

In December 2008, the Prompt Payment Code (PPC) was set up to encourage a culture of large companies paying smaller suppliers on time and the FSB is now calling on the Government to strengthen the code once again.

Multiple online publications, including Real Business and growthbusiness.co.uk, have focused on the issues that SMEs are facing as a result of late payments by big businesses this week - you can read more here:

Don't let big businesses call the shots - growthbusiness.co.uk
Half of SMEs are paid late by large firms - Real Business

If you are experiencing cash flow problems as a result of late invoice payments, visit the Close Brothers Invoice Finance website, or give us a call on 0808 252 0353 to see how we could help.

SMEs uneasy about rising energy prices

The Guardian have gathered some key pointers from a panel of experts around how SMEs can boost their efficiency. The article discusses subjects such as the pros and cons of remote working and outsourcing of "non-core admin elements".

The Guardian's report also gives tips around energy saving - a particularly timely subject following further price increases from the "Big 6" energy companies towards the end of last year. Results from the Close Brothers Business Barometer* reveal that SMEs are particularly uneasy about rising energy prices, with 88% of businesses in the print and packaging sector of the opinion that energy companies are taking advantage of them in terms of rising prices. 

Read the full article here.


*The Close Brothers Business Barometer is conducted on a quarterly basis. It canvasses the opinion of SME owners and senior management throughout the UK on a range of issues affecting their business.