- 20 Jun
Business Growth & Alternative Funding Discussion
I was invited to this morning's round table debate "Big Opportunities for Business Growth", which which I attended.
It was an interesting debate that encompassed:
- Should businesses be seeking growth or consolidating?
- How should they fund that growth?
- Who should be responsible for encouraging that growth.
The essence of the discussion was that it is down to everyone to seek growth. Businesses for their own sakes but also the government to incentivise and encourage growth and a positive culture for business in general. There seemed to be a clear need for funding and there was a general consensus that there are many businesses that are unable to access enough funding. This is in stark contrast to the large number of invoice finance companies that are hungry to fund businesses but there remains a lack of understanding, awareness and some residual stigma from days long past about factoring.
It was recognised that the risk appetite of businesses generally has lessened but organic growth should still be a goal even if mergers and acquistions may not be as common as they once were.
The important role of banks was recognised and how they are businesses too, responding to the competing pressures on them, but they remain key to getting both mainstream funding to businesses and to opening up the channels to alternative funding sources. There was some concensus that both the banks and accountants are key avenues to which businesses turn when they need funding help and advice.
New sources of finance such as crowd funding seem promising emerging options but again they are not well known. Similarly, for those that want to fund single invoices or batches of invoices there are now various online platforms that will enable businesses to do this. The majority however seem to prefer as much funding as they can for as long as they can keep it!
Zombie companies were mentioned - the concept of the "walking dead" - businesses that are carrying so much debt that the most minor or setbacks will cause them to fail but they struggle on all the time the status quo is maintained.
The ability to use invoice finance in order to replace and exceed overdraft funding was also discussed.
Overall it was a fascinating debate.