We caught up with commercial finance broker, Carole Roe to discuss finance during the pandemic and why it's vital to fully understand the needs of a business to provide them with the right funding options.
I’m a Scot who moved down to England in the early 80’s and joined Griffin Factors ( part of Midland Bank ) as an account manager. I’ve still no idea why they employed me…I was rubbish at maths, I didn’t even know what factoring was and I spent 2 weeks in a panic reading a book on how to read a set of accounts.
Whether this was a case of ‘fake it till you make it’ or instantly feeling at home in the industry I’m not quite sure, but 35 years later I can honestly say I’ve loved every minute. Back then factoring really was considered lending of last resort and it’s been amazing to see Invoice Finance ( it even has a new name !) be considered a very mainstream form of finance.
In 1992 I started Capital Corporate Finance, one of the first factoring brokerages in the UK. At that time the industry was expanding and I felt very strongly that if the fit between the lender and the Client was right then this was a fantastic way of funding the cashflow needs of a business.
The wrong fit could be a different story and make for an unhappy Client and another hit on the reputation of a type of funding that was already struggling to be taken seriously. I sometimes felt like I was a one woman crusade but am proud to see the industry as it is now.
Fast forward 30+ years, Capital Corporate Finance has a great reputation for bringing quality deals to the market, I’ve been an expert witness on the subject of factoring in quite a high profile case, I can read a set of accounts in my sleep and am much better at maths!
For me it’s always about the people, both at the Client end and the Lender end. Every day is different, every deal is different and I feel it’s quite a privilege that a business owner can open up to me about the inner workings of their business, their funding needs and often their fears and worries.
The trust that this can create often leads to many more interesting conversations and I’ve often found myself being a sounding board or a marriage counsellor ! At the other end I truly value the relationships I have with my lenders, they are as important to me as my Clients. This industry has so many great characters and interesting people, I thank my lucky stars that I fell into this world so many years ago.
Well this sounds horribly cheesy, but my Dad, who was a businessman and my hero, had a mantra which was “it’s nice to be nice”. In my 35+ years in the industry I’ve gained a huge amount of knowledge, I’ve built a lot of solid relationships, but the bottom line is I’ll always try to be nice to people. It’s worked for me!
When the pandemic hit I was bracing myself for the tidal wave of failures and disasters in my book of existing Clients. This never happened, really because of the incredible Government support that Clients were able to access quickly and on good terms with repayment holidays. Some may feel some concern about 2022, as these repayment holidays come to an end and businesses start to feel the pressure of paying for their increased borrowing.
As a broker there’s also a moral obligation to businesses that come to a broker seeking additional finance. In the majority of cases a business will seek additional funding to move the business forward but on occasion it’s to delay the inevitable, with a business looking likely to fail, and this can make for uncomfortable but very honest conversations with a Client. I’ll never add further debt to a business in this position, especially when there are often personal guarantees in the mix.
I wish all brokers would take this approach, unfortunately this is not the case. Despite these underlying concerns, speaking to businesses right now confidence and optimism appears to be high and lenders are very much open for business again.
Business owners today really have to think on their feet and think outside the box. Running a business is a big enough job and who would have thought a few years ago we’d have to add Global Pandemic to the list of challenges.
Traditional forms of finance, such as the bank overdraft, are very hard to come by, especially for a young or small business that can’t offer up security. There are many other options and alternative lending options available but a lot of rabbit holes you can fall down if you don’t know where to look or what you’re signing up to. This is where a good broker is worth their weight in gold. By fully understanding the needs of a business they can present you with the most appropriate funding solutions and explain everything clearly.
Most brokers will be rewarded by the lender on a success basis, so you won’t have to pay for their services and they will usually be able to secure funding faster and at better rates than if you were going direct. Make sure your broker is independent and able to work with the whole market and never be afraid to ask to speak to someone else they’ve assisted.
At the sharp end it definitely feels like lenders are open for business again. Understandably a lot of lenders have spent time making sure their existing Clients are in good shape and that they have no impending disasters in their own books. Underwriting has been tougher but this is changing with a good appetite for new business and there are even new players coming into the market.
Platform based solutions continue to gain ground, and many businesses, especially those run by a younger generation, prefer to work this way. Having a mix of relationship based lending and a more hands-off option is another great development in the industry.
This depends on the business I’m funding. Every lender is different and every Client is different and I have to make sure the fit is perfect. That’s trickier than it sounds but if you get that right at the beginning you are creating a funding partnership that should be able to last the lifetime of a business. I always take into account the people, sector, the size, and the aspirations of the business, i.e. if they are on a high growth path will the lender still be able to offer an increased funding line in time.
The main reason I’d recommend Invoice Finance over other forms of funding is it’s a hugely flexible, covenant light form of funding that will always grow with you. Unlike a loan or an overdraft you’ll never have to re-negotiate your funding line. Because it’s linked to your sales, as you grow your facility grows with you. Over the years I’ve funded start up businesses that are now household names and many of them would never have got there without Invoice Finance.
I love live music and can be equally happy in a stadium or a grungy basement, something else I’ve missed over the past couple of years. Whether I’m running, walking, skiing or cycling I love to be out in the open air and I’m always up for a challenge. I’ve run marathons, climbed mountains and cycled from Lands End to John O’Groats.
The other part of my life that’s very important is the charity work I’m involved with. I’ve raised over £1m for Childline and a number of smaller charities, I’ve spent a lot of time working with children overseas and on the charity front I have some big news coming in early 2022…watch this space!
Hugs (even my postman has had a hug, he looked a bit surprised) and planning. I love travelling and found that year with an empty diary quite strange.
I’ve now got lots of trips planned for 2022, and can’t wait to visit my brother in California, my friend in New York who has had a baby I can’t wait to cuddle and in January I’ll be whizzing down a ski slope for the first time in 2 years.