As a past High Growth Finance Coach, I discussed finance issues with local businesses on a daily basis. Access to finance is a consistent topic in my conversations with clients and is often identified as a major barrier to growth.
Here are the top 10 finance queries that I get asked by businesses.
1. I am struggling to manage my cashflow and pay my suppliers on time
Managing cashflow is key to a successful business; a business can survive for a short time with no orders but not without cash. Good credit control is vital also consider:
- Checking invoices are correct as errors lead to time delaying queries
- Having clear payment terms agreed
- A clear process to chase payments, even starting a week before payment is due.
- Consider factoring or invoice discounting
2. I keep hearing about Patent Box. What is it?
This is a new preferential tax regime that taxes UK companies at a reduced rate of 10% on qualifying patent related income. This can include profit from sales and licensed fee income.
3. My bank has turned me down for a loan
You need to understand why you have been turned down, if your company is viable there are other loan providers where you need to be turned down by your bank to apply. Fredericks Foundation and South West Investment Group are just two of the providers who may be able to help.
4. What is crowdfunding?
Crowdfunding is an online marketplace to help businesses find loans, investment and investors looking for better returns. Sites like, Funding Circle, Zopa and CrowdCube directly connect people who want to invest money with vetted, established businesses who want to borrow money. This can be in the form of a loan or equity investment. Although a relatively new concept the idea has taken off with many millions being lent or invested.
5. I need a loan to grow my business but don’t have any assets to use as security
Enterprise Finance Guarantee gives vital funding to small and medium-sized enterprises (SMEs) that lack the collateral or credit history to secure a normal bank loan. The loan is offered in conjunction with the UK Government who guarantees up to 75% of your loan. It is designed to support small and medium-sized businesses with a viable business proposition but no or insufficient security to back their borrowing.
Loan amounts are between £1,000 to £1 million and run from 3 months to 10 years.
For a list of participating lenders go to:
6. Are there any grants?
Grants are pots of funding for a specific purpose and are usually match funded. To find out if there are any grants to suit your purpose and to check eligibility go to:
7. I have just started my business and don’t know what records I should keep
There is a wealth of information to draw from on the HMRC website under the "Starting in Business" section. You could also check with local accountants if they do a free first appointment to discuss through what you need to record. Some accountants will offer specific support around managing your finances and HR support.
8. I want to raise equity investment for my business and don’t know where to start
Firstly you need to ask yourself if you are just after investment or if you want to attract an investor with expertise or contacts that your business lacks.
If you are looking for investment and expertise then SWAIN would be a good place to start.
However, if you are just looking for investment then you may consider an online investment model like CrowdCube, where a high number of investors invest smaller amounts of cash.
9. What can I do about late payments?
The late payment legislation was established to combat late payment in commercial transactions. This will make pursuing payment a simpler process across the European Union, reducing the culture of paying late and making paying on time the norm.
Under the rules, debtors will be forced to pay interest and reimburse the reasonable recovery costs of the creditor, if they do not pay for goods and services on time (60 days for business and 30 days for public authorities).
Solicitors often offer a debt collection service which can be in the form of no win no fee or fixed charges.
10. I have an order from overseas and I need to finance it?
The Export Working Capital Scheme from UK Export Finance can offer a partial guarantee to the bank on the exporter’s behalf (of up to 80% of the value in some cases), so that it can gain access to the working capital with which to perform the specific export contract, whether before or after shipment, until paid by the buyer.