How ACF Direct is helping businesses build back after COVID

20th July 2021

We spoke to Jerry Riches, Associate Director at ACF Direct about the cash flow issues businesses are facing and how his company is helping firms overcome these. 

What do you see as the biggest issues companies are facing right now in terms of cash flow?

Many businesses have had to reach into their cash reserves to survive during COVID-19, indeed many have taken either Bounce Back or CBILS loans. Therefore, as business volumes increase, so does the amount of cash tied up in working capital, stock, work in progress and debtors. This cash demand is already creating difficulty for some business, not least at the month end when the payroll is due and for some those COVID-19 loan repayments have started or will do soon.

There is also the problem of material supply, already very evident in the construction sector, but affecting many others. This has the potential to delay completion of work, hence being able to invoice and get paid, or businesses will choose to hold additional stock, obviously having a further cash implication.

How does your company help businesses generate more cash and why is it important?

It’s an unfortunate fact that businesses fail when they run out of cash, not because they’re making losses. It’s therefore essential for any business to understand and manage its cashflow. It’s also true that lenders will have a limit to which they are willing to be exposed to any businesses, so even if your bank is willing to lend, this will often be restricted according to their credit appetite. As a broker working with over 50 lenders, I can engage more than one lender, therefore enabling an overall greater amount of credit to be provided. Also, many alternate lenders have products that are not offered or considered cost effective, by the banks. These products are often more tailored to the SME sector, so while not attractive to your bank may be a better fit to your business. An obvious example is an overdraft which can be very difficult to obtain through your bank, or is for a minimal amount, this is available through alternate lenders.

Why is alternate financing important for struggling businesses?

Many businesses feel rather “unloved” by their bank, they have little or no relationship with their manager and maybe an 0800 number to a call centre. The banks are great when lending to large corporates for multi-million-pound facilities, alternate lenders are often not able to support those larger facilities. But just as an SME businesses can give a more tailored service to its target customers, the same is true for alternate lenders.

The UK economy is highly dependent on SME businesses and alternate lenders are interested in understanding their story as part of the underwriting process. As example, all CBILS applications that I received in the last year had been declined by their bank, however, using alternate CBILS accredited lenders I placed nearly 90% of those enquiries.

Alternate lending is expected to have grown by over 50% during 2020, as these lenders supported SME businesses during that most difficult period. Their funding avoided a debt crises in the economy and positioned the lenders centre stage to enable the UK and SME businesses in particular to recover in 2021 and beyond.

How has joining the Chamber helped your business connect to companies in need of finance support?

The Chamber is important for the opportunity to be known, most importantly for your willingness to provide unpaid guidance and insight on matters outside most people’s core skill set. By building relationships in this way, enquiries for finance arise. 

Why should businesses join the Chamber?

If you are seeking the opportunity to mix with interesting people in the local business community, from which business opportunities will arise, then that is a great reason to join.

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