"We firmly believe that it’s our responsibility as an industry to demonstrate the positive impact alternative finance can have"
We spoke to Simon Willmett, finance director at Nucleus Commercial Finance, about how small businesses can address late payments and how ongoing Brexit uncertainty is affecting the way SMEs seek alternative finance.
CR: Tell us a bit about Nucleus Commercial Finance and your role there.
At Nucleus Commercial Finance, we combine the stability of bank finance with the flexibility and speed of alternative lending platforms, to make solution-led finance accessible to a growing number of businesses. We offer anywhere between £3,000 to £50m to help these companies achieve their ambitions over the short, medium or long-term. As one of a few multi-product lenders within the alternative finance space, we are able to leverage the benefits of a wider range of products thanks to the expertise of our team. Having product specialists and quality surveyors onboard, enables us to better serve our customers through a combination of products that provide all-encompassing financial support that is structured to meet their individual needs.
My personal journey at Nucleus started in 2015 when I joined as the company’s finance director. I am integral to the day to day operations involved with running the business, with a focus of ensuring we deliver on our growth ambitions. I sit on the board and our aim is to ultimately steer the business in the right direction. I am also a member of the credit committee undertaking due diligence on larger complex deals, especially where there is an element of distress or a restructuring angle, and ensuring that we’re providing our customers with the right financial solutions for them.
CR: Late payments are costing SMEs billions of pounds a year. What can small business owners do to address this issue?
Our own research showed that the average invoice takes 74 days to be paid, 44 days longer than typical 30 day payment terms, which as we all know can have a tremendous detrimental effect on cash flow for SMEs. Ultimately, businesses need healthy cash flow to thrive, grow and contribute positively to our economy. As a finance provider we can support businesses better, having understood the pressures on their cash flow and then highlighting how different financial products such as invoice or cash flow finance, could help alleviate the pressure.
SME owners also need to play their part and manage their invoicing process. Ensuring that they state their expectations from the outset, follow a straightforward process and stay proactive when chasing late payment. Using clear and accurate documentation and streamlining processes as much as possible will also help.
CR: How is ongoing Brexit uncertainty affecting the way in which SMEs seek alternative finance? Are there any trends you’re currently seeing?
Ongoing political and economic uncertainty is clearly taking its toll on businesses throughout the country. Our recent research found that almost one million SMEs are holding back from accessing additional capital due to the challenging business environment. We can also see this in the shifts in the finance options businesses are seeking and their hesitation in using the finance once they have secured it. Many businesses are being approved for finance and using the knowledge that the finance is there as a security blanket. Amidst the uncertainty they are not feeling confident enough to put that finance into play and invest it in growing their business. This hesitation will be felt more keenly further down the line when the impact of businesses not fulfilling their potential is felt by the economy.
We firmly believe that it’s our responsibility as an industry to demonstrate the positive impact alternative finance can have, helping SMEs to future-proof their businesses and step into the future with confidence.
CR: What advice would you give to SMEs given the current economic and political climate?
Whilst there is so much going on around them businesses need to keep their minds focused on the growth and ambitions they are trying to deliver. It sounds simple but have a plan, work out the challenges in delivering it and be focused on it. Sometimes in business tough decisions have to be made to deliver future success and business leaders shouldn’t shy away from these.
When it comes to finances it’s important for businesses to remember that there’s a wide range of options available and it doesn’t have to be a one-size-fits-all approach. As an alternative finance provider, we’re here to help SMEs get the right finance package in place, so they’re prepared for whatever the future of their business may be.
We’re currently seeing an increase in demand for asset based lending (ABL), as ABL provides a higher level of finance than traditional methods, allowing businesses to unlock the value of all available assets, including debtors, stock, plant and machinery as well as commercial and residential property. Businesses shouldn’t shy away from their future opportunities without fully investigating the difference that putting the right funds in place could do for them.
CR: If you could see one headline about financial services this year, what would it be?
Access to quicker, cheaper debt and the introduction of faster payment technologies free up precious capital for reinvestment and growth.