By Just Cash Flow PLC
In this Q&A, Just Cash Flow PLC Marketing Director John Davies reflects on his experiences to date since the business launched in the UK in early 2014.
Q1) What has and hasn’t surprised you since opening for business?
What hasn’t surprised me is the substantial demand for finance from businesses keen to grow and invest. It’s well documented that the traditional Banks aren’t fully meeting this demand and there has been a healthy increase in the number of alternative lenders attempting to fill this gap.
It is surprising that many growing businesses simply don’t approach the traditional Banks as they perceive the answer will be ‘No’.
One of the first questions we ask a prospective customer is have they approached their Bank as this, in most cases, will be the best option for them. However, it is clear that alternative lenders provide a much faster solution and are geared up to understand small businesses.
Q2) What could businesses keen to grow do to help themselves?
We have a higher turndown rate than we expected and one of the key reasons is owners not fully understanding their own businesses and expansion plans. Today a key part of our underwriting involves understanding how well an applicant knows their business, financial position and future plans. If someone can’t tell you the difference between a P&L forecast and a cash flow forecast it sets alarm bells ringing.
Over 30 years ago when I ran a number of growing businesses I would have benefited from a better knowledge of key business fundamentals, especially how managing your cash flow is all important.
Nothing much has changed and it would really help to have a national, University led qualification for potential Directors that includes :
* Employment Responsibilities
* Sales and Marketing
* Role and Responsibilities of Directors
The best businesses are on top of all of this and, of course, well positioned to become much bigger ones.
Q3) Do you think SMEs should take more responsibility to make themselves creditworthy?
Television programmes such as Dragons’ Den help highlight the fact there is no shortage of good ideas. However, businesses applying for credit could learn a lot from the line of questioning the Dragons adopt and the reason why the common response is “I’m out”.
Where is the business plan? Who looks after the finance? What are the business KPIs? Just Cashflow is looking for the same information and it really increases the chance of getting finance if the business has the answers and can demonstrate it is being proactive and in control.
Naturally, how the business is going to be financed and how the all-important cash flow is going to be managed are key questions businesses should address. Unfortunately, we come across examples of Directors who enjoy their title but obviously have a very poor grasp of business fundamentals.
Q4) What positive steps can businesses take before applying for finance?
Businesses should focus on doing everything they can to improve their creditworthiness. Some Directors we have encountered focus purely on the company and forget that almost all prospective lenders will also run a personal credit check. Therefore, Directors paying their own credit cards, utility bills etc. and showing they are in control of their own finances is extremely important.
Filing business accounts within the deadline, paying suppliers on time, having a Debtor Book and a system in place for ranking and following up late payers all contribute to building up a very positive picture of a well-run business. Being proactive like this doesn’t guarantee you success but believe me it does significantly improve your chances.
Just Cashflow is in the business of helping businesses improve their creditworthiness. In future if one of our customers approaches a traditional Bank for finance we will be only too happy to help. A record of drawing down on one of our finance facilities, meeting regular interest payments and repaying in full means we will be able to provide an excellent credit reference.
For more information about Just Cash Flow PLC call 0121 418 2026