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Funding against insolvencies

Josh Levy - Ultimate Finance
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23rd December 2019
Josh Levy - CEO at Ultimate Finance

High-profile insolvencies have been a common feature of business headlines throughout 2019. With the economic landscape unlikely to stabilise within the context of the UK’s pending Brexit, research from Atradius forecasts the rise in insolvencies could become a persistent trend throughout 2020.

Atradius’ global report highlights that not only are insolvency rates increasing for the first time since the financial crisis of 2008, but that the UK is set to be the worst hit – with forecasts predicting a 10 per cent rise before the end of 2019. Compare this to the 2.8 per cent average increase across the world’s developed markets and the scale of the issue becomes clear.

Industry leaders such as British Steel and Thomas Cook proved that no business is infallible. Their collapse raises awareness that no business is too big to fail. The collapse of Thomas Cook has been associated with the economic climate, an inability to adapt to industry changes and pressure from competitors who did. One factor attributed is the question of why the company did not accept the recommendations of advisors to sell its debt when it had the opportunity. When a company is in a position of having to take stock and make changes to protect its future, there might be an abundance of advice on offer; getting advice from the right people is crucial. If the rate of UK insolvencies is to be stemmed in 2020, business advisors and brokers could be instrumental in bucking this trend.

Understanding business ambitions

Brokers are uniquely positioned to assist in tackling the rise of insolvencies. A broker’s distinctive ability to get under the skin of a business and to have an acute understanding of its needs and ambitions is critical to ensuring business owners have the tools they need to thrive, or in the current climate, adapt.

For a business trying to navigate these turbulent times, and crucially to emerge unscathed, having access to reliable advice and tailored funding solutions can be the difference between a good decision in the direction of growth, or an uninformed one risking failure. This is especially significant as startling new research from Xero outlines that a quarter of small business owners believe their company is at high risk of folding within the next five years.

Supporting businesses to get funding ready

For many of our clients, their first hurdle was simply not knowing where to start in order to secure business funding; what is the right product for me? What is the process for securing it? As a funding provider, we see first-hand the vital role that brokers play in ensuring businesses have the right advice and support when making these decisions. Whether it be through invoice finance, asset finance, bridging finance or a structured combination, lenders work closely with us to ensure the right tailored solution is found.
Business owners quite often inject their own money back into their company to keep afloat, indeed, for 26%, their business is leaving them out of pocket. Brokers have an opportunity to  bridge this gap, put the correct funding solutions in place, and ultimately assist those in danger against the rising threat of insolvency.

Connecting businesses with solutions to succeed

No two businesses are the same – brokers and funders know this, arguably more acutely than the big banks. By understanding exactly what challenge your client is facing, what they want to achieve, and how they can be assisted to support these ambitions, brokers can connect businesses with the right solution to succeed.

Working with a partner that is able to provide a flexible funding solution catered specifically to the business’ ambitions and challenges is crucial. Brokers and such partners working together can go a long way to help stem the tide of insolvencies and help British business thrive in 2020.

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