By all accounts the authorities don’t like cash: it fuels the grey economy, reduces the tax take by allowing people to hide undeclared income, and makes it easier for terrorists, criminals and drug dealers to carry our their dastardly deeds. Cash is also expensive to transport and store, and is not very secure – you can easily lose it, it can be forged and it can be stolen.
Some businesses adopt a ‘DIY’ approach to raising finance, and without realising, put themselves at a disadvantage. Here are five reasons why the DIY route is not necessarily the best option.
In this article, we will try to correct a few of the common misconceptions about banks and about lending. By ‘misconceptions’ we mean those things that can undermine a borrower’s prospects of arranging finance on beneficial terms, because they lower their expectations and make it more likely that they will either accept inferior terms, or give up at the first sign of a set back.
We think it is…
All banks promote the concept of the Relationship Manager; but based on what we have seen and what many other people tell us, the banks have created an environment where it is almost impossible for their personnel to deliver it, in the way that Managers would like.
Most bankers are personable people, so it is easy for borrowers to make the mistake of assuming that a personable Manager is also a competent lender, who will lend them the money they need on the most competitive terms. This isn’t necessarily true – the two do not go hand in hand.
The high street banks could be facing another bill for mis-selling. The issue at the heart of the problem – the inherent dangers in the lender/ broker relationship – sounds a clear warning for business borrowers.
The Financial Conduct Authority could decide to introduce new rules following a recent landmark court ruling concerning the non-disclosure to customers of high commission payments made to lenders and brokers when selling financial products.
Introduction – Factoring and Invoice Discounting – the hidden dangers
Factoring and invoice discounting (ID) products are designed to free up working capital against a company’s outstanding book debts. They are mostly used to support growth, fund management buy-outs, or finance recovery.
Alternative lender Close Brothers issued a report earlier this year in which it identified that 33% of SMEs have never changed to a new lender. The reasons included a lack of time, being unsure of options and fear of being penalised by their current provider. Of those that did move to a new lender within the last 10 years, almost a third moved to an ‘alternative’ (i.e. ‘non-bank’) lender.