As business confidence increases further and many look set to increase their activity, the printing industry must be ready to take advantage of new opportunities. Evette Orams, Managing Director of Hilton-Baird Financial Solutions, explores how use of the right funding could help your business do just that.
"The good news just keeps on coming. Even before the 0.7 per cent expansion in output during the three months to the end of June was revealed by the Office for National Statistics, there were already signs that the economy was on the mend, signs which have only increased in strength and frequency as time has gone on.
This sense of security is proving crucial to a growing number of businesses adopting a more positive and confident outlook for the coming months. A good gauge for overall sentiment has always been how much money businesses are prepared to allocate to their marketing departments, which means new figures from the Institute of Practitioners in Advertising are extremely encouraging.
Its quarterly Bellwether Report indicates that marketing budgets are on the rise. During Q2 2013, 22 per cent of businesses increased their available budgets, which represents the highest proportion in almost six years. Although 15 per cent decided to trim theirs over the same period, the resulting net balance of 7.3 per cent is the highest since Q3 2007.
This, of course, spells great news for the printing industry. Marketing departments constitute a large proportion of new orders so, if marketers are being given the means to launch that new campaign, odds are the benefits will soon be felt amongst the printing population.
The flip side
Throughout the downturn, order volumes haven’t been the only aspect of running a business that’s been below par. Although demand is part of the formula, the challenges experienced with accessing new finance facilities and complications posed by widespread late payment have led to many companies having to contend with restricted cash flows.
The potential downside to enjoying increased demand for services is therefore the additional strain that this could exert when trading on credit terms, particularly when it comes to paying suppliers weeks, if not months, before payment is received.
Historically the likes of overdrafts have been relied upon to bridge this gap, but nowadays this option often isn’t available. A report from the Ernst & Young Item Club predicts that total lending to businesses during 2013 will be 25 per cent lower than it was during 2008, a staggering reflection of just how difficult businesses have found securing new lending. This is despite a plethora of initiatives being introduced by the government, often to the detriment of SMEs.
But there is an advantage. Many have had to look beyond traditional lending at solutions which may not have been considered previously, but are actually more beneficial. Take asset based finance as an example.
Bucking the trend
This column has regularly featured the latest statistics from the Asset Based Finance Association following impressive growth, and providing a stark contrast to the wider lending scene. In September, the figures for the second quarter of the year were published, and indicate that this trend is only continuing.
On an annual basis, advances made by funders to asset based finance clients increased by 10 per cent in Q2 2013 to £17.5 billion as client numbers surpassed 43,000. Asset based finance is often referred to as invoice finance due to the fact that the majority of funding that’s advanced is done so against the value of unpaid invoices, but it’s important to note that cash can also be unlocked against a range of other assets.
One reason why this has proven a useful tool for the printing sector over the years is that this includes plant and machinery. Between April and June, advances made against these assets increased by 44 per cent to provide an even greater cash flow boost to those prepared to look beyond an overdraft.
Tools to succeed
The upshot of this improved cash flow is that clients are therefore equipped to function more efficiently. Whether paying suppliers on time, comfortably meeting day-to-day commitments or setting money aside to invest in growth, the options are endless.
This is evidenced by total clients’ sales increasing by 16 per cent over the same period to £67.9 billion. And, to counter the threat of late payment, the proportion of that sum covered by credit protection increased by 3 per cent, with credit protection payments growing by 18 per cent.
Put simply, there is no shortage of evidence to suggest why and how asset based finance has the potential to provide invaluable cash flow support to so many of the UK’s businesses. Arguably its biggest challenge is communicating these benefits to those who are, at present, unaware.
But with figures such as these, surely it’s a solution that’s too good to ignore."
About Evette Orams: Evette Orams is Managing Director of Hilton-Baird Financial Solutions, which is part of the Hilton-Baird Group of companies. As an independent commercial finance broker, Hilton-Baird’s aim is to clearly identify their clients’ business requirements and introduce them to relevant providers.
About Hilton-Baird: Hilton-Baird Financial Solutions was voted Asset Based Finance Broker of the Year 2009 & 2010 at the Business Moneyfacts Awards and UK Asset Based Finance Broker of the Year 2012 at the ACQ Global Awards, demonstrating its reputation and the trust its clients place in its service. The business’ affiliations to the leading financial industrial bodies, the Asset Based Finance Association (ABFA), the Finance and Leasing Association (FLA) and the National Association of Commercial Finance Brokers (NACFB), ensures it maintains the highest level of standards for its clients.
Find out more about how invoice finance can help your business at www.hiltonbaird.co.uk/FS.
For more information, please contact:
Evette Orams
Managing Director, Hilton-Baird Financial Solutions
Tel: 0800 9774833
Email: LFR@hiltonbaird.co.uk
www.hiltonbaird.co.uk/FS
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