Keep a close eye on your future cash balance

- Allowing a surprise gap in incoming funds to sneak up on you can be disastrous – make sure that your projections for the next 3 months are constantly updated.

– Refine your projections over time – when you foresee and can prepare for future holes in your cash flow, that’s when you know you’re in control of your business.

– Growth is expensive – before taking on any new project, employee or extra stock, be sure to take a long look at how it will change your cash flow.

To find out more about how MarketInvoice can help you manage your cash flow, visit -http://marketinvoice.com/how-it-works/.

“Online invoice trading platforms are an expansion of the asset based financing market and allows businesses, for a fee, to sell outstanding invoices to investors on an online exchange, in real time.

Online invoice trading platforms have developed significantly in the UK in recent times, following the creation of an online receivables exchange in the US, which has funded $1bn of small and medium-sized businesses since its inception in 2008.

How it works:

• A business applies online as a ‘seller’ and after approval by the platform, selects invoices that it wishes to raise finance against.
• A pool of investors bid to advance funds against the invoice, with the best bids ensuring a competitive rate.
• Funds are advanced into the business’ account, usually within 48 hours of uploading the invoice.
• When the business’ customer pays the invoice, the business refunds the investor with the advance plus fees.

Manufacturer uses online trading platform MarketInvoice to support its development

Established in 2002, Predator Equipment, a manufacturer of trailers and equipment, employs 13 people and has a turnover of around £1m. With new orders from a large corporate customer in Scandinavia, the business needed working capital to meet the order.

Because the debtor was a successful corporate, MarketInvoice, a UK online finance platform, was able to finance the business’ foreign invoies. Predator has since used MarketInvoice to access funds against over £600,000 worth of invoices.

In freeing up the cash locked in their long-dated invoices, Predator has been able to expand its factory to increase its output, and expand its customer base abroad.

Eamon McVeigh, founder of Predator Equipment:

‘I needed flexibility in my financing, the application process was simple and I got an answer within a few days. Since then the process of raising finance is seamless, and takes a lot of the hassle out of my business.’

This month, Anil Stocker commented on the future of banking and why it won’t be determined by banks: ”Individuals walking down the street are using their smartphones to instantly fund loans that would once have been managed by banks.”

“Businesses need better access to credit, while lenders want to know where their money is going, and that’s what the new players are letting them do.” You can read the article in full here.

Business Success Story – Connected Pictures

Connected Pictures is a production house that works for large corporate clients. With invoices paid in up to 120 days, the partners wanted to find working capital to invest in new projects. Wanting to keep good relationships with their customers, they didn’t want them chased by someone else.

MarketInvoice fit the bill perfectly. Selling invoices as and when they want, and controlling their own customer relationships, Connected Pictures now have working capital whenever they need it.

“MarketInvoice’s flexible approach and transaction-only fees really appealed to us”.

Recent MarketInvoice News, Press Releases and Commentary

‘The next Google will be funded by alternative finance‘ - MarketInvoice Blog

MarketInvoice mentioned in an article on VentureBeat – ‘Why disruptive finance has found its home in London‘

‘The future of banking and why it won’t be determined by banks‘ - Anil Stocker comments

MarketInvoice comment piece in Entrepreneur Handbook - ‘Financing the Future – Alternative Finance’

Thank you for that introduction and thank you for inviting me here today.

The importance of the City to British business

For us, the future of financial services – the City – is incredibly important. Any potential Government hoping to take office and any current party of Opposition charged with scrutinising what the Government does, should want to see the City thrive.

It is a key business sector which – along with the associated legal, accountancy and other professional services – gives us a competitive edge and a comparative advantage due to our talent, our legal system, the liquidity of our financial markets and our time zone.

It is a sector which we look to pump oxygen into the rest of the economy, helping businesses in other sectors expand and grow.

The need for business growth was starkly highlighted in the recent Budget. We learnt that the Government is now borrowing £245bn more than it planned, with welfare spending up by £20bn and nearly one million young people unemployed. The Government’s interest seems to be exploiting our economic problems, as we have seen on welfare, rather than solving them. They are trying to blame the very families who are paying the price for the Government’s failure. What we actually need is action now to boost house building and get people back to work with a compulsory jobs guarantee. And we need a different kind of economy with a financial system that serves our businesses.

When we talk about diversifying our economy, we are not talking about reducing the size of our financial services sector but growing the size of other sectors of the economy. The financial services sector has a crucial role to play in that diversification, which is why – to coin a phrase – I am intensely unrelaxed about the problems small businesses and entrepreneurs face in dealing with our banks.

And, of course, it goes without saying that the sector performs vital utility functions for us as individuals. Like water and electricity, our banks are essential to every day life, safeguarding our deposits, providing a payment system and so on.

So my first point is this: we are unapologetically critical of the City when needs be but we cannot be anything other than pro City, given its central importance to the economy at home and paying our way in the world abroad.

Restoring the reputation of the City and rebuilding trust

Next, if the City is to continue to perform its functions – as a global financial hub and provider of finance to the real economy at home, it must command trust and confidence.

The attempted rigging of LIBOR, the gross misselling of interest rate swap products to small businesses and the payment protection insurance scandal, amongst other things, have done immeasurable damage to the international and domestic reputation of the City.

After these events, there were the usual expressions of regret from senior management, a reprimand and/or a fine from the regulator and strong adverse comment from Westminster. Yet, there was little visible collective action on the part of the sector as a whole.

Given the collective hit the sector has sustained through all these scandals, is it not time for there to be a very visible coming together of the principle players in the sector to address the ongoing reputational crisis the sector faces – a public summit of the key industry leaders where action points can be agreed and then implemented?

Yes, regulators and Government have a role to play, but supervision and regulation cannot act as a substitute for trust – you cannot regulate or legislate for being trust worthy.

So my second point is this: if the sector is to recover trust, it needs to be seen to very visibly be getting its own house in order. That is why I very much welcome today’s event.

It is why I welcome the fact that there are those who are now speaking out engaging in the public debate, leading the process of change. Anthony Jenkins at Barclays and Stephen Hester at RBS are doing this and Anthony Browne, newly installed at the British Bankers Association, has said his main mission is restoring trust. Good.

But much more needs to be done and there are still many lessons to be learnt. Barclays releasing details of £40m worth of bonuses to senior executives at the same time as the Budget announcement sent all the wrong messages and is indicative of this.

It goes without saying that politicians are not in a position to lecture on trust – we are less popular than you and we learnt the hard way after the expenses scandal, when we had to get our house in order. But at least the people saw politicians brought to book – with some of our number serving time in jail for their wrongdoing.

Particularly in respect of the LIBOR rigging scandal, it seems to me that we will not rebuild trust with the public or affect a culture change in finance until custodial sentences are imposed on those guilty of criminal wrongdoing in your sector. It cannot be right that someone who seeks to cheat the benefits system out of a couple of hundred pounds in my constituency may well be thrown into jail for doing so, but those who seek to rig the financial system and receive hundreds of thousands of pounds as a result never seem to suffer the same fate. Is not the prospect of jail for gross wrongdoing one of the best ways we can affect a culture change?

Changing culture and making our banks safe

This brings me to my third point: if our banks are to rebuild trust, we need to see a change in culture in the sector and our banks must be made safe. Never again must we be in a situation where they have the potential to bring down our entire economy; never again must the perception or reality be that the interests of those in the sector are being put ahead of the customers and beneficiaries the sector is supposed to serve.

So today, it is essential that the reforms under way to address these two interconnected issues must be completed and implemented in full.

Structural reform to separate retail from investment banking activities is not just necessary from the point of view of stability and security, it will also improve the culture in our banks. Both the Independent Commission on Banking and ongoing Parliamentary Commission on Banking have made various recommendations in this regard. We are clear: if the letter and spirit of the ICB’s proposals are not delivered and we do not see cultural change in our banks, we think full separation will be necessary.

And whilst action at the level of the institution is important, institutions are made up of individuals, which is why remuneration arrangements that create the right incentives and behaviours are important as well. The EU has led reform in this area.

But, beyond reform of pay, there must be much stronger individual responsibility for decisions made and action taken. That is why we have argued for a new code of conduct for bankers. As Ed Miliband said in his banking speech last July, just as the doctors and lawyers professions have clear rules and codes of conduct which lay down what is expected, we need the same for banking where anyone who breaks the rules can be struck off.

Of course, structural reform and stronger individual responsibility are not a panacea; we need proper resolution mechanisms, making it easier and less costly to sort out banks that get in to trouble, and greater capital and other loss absorbing capacity in our banks as well.

At this juncture I should say we should have better regulated the banking sector during our time in office but we didn’t and that is a source of regret.

In fact, mea culpa in that respect is due across the political spectrum given the consensus which existed around a more light touch approach before the crash. During the Second Reading of the Financial Services and Markets Bill in July 1999 my opposite number, Vince Cable, expressed broad support for the regulatory framework we put in place, saying its “philosophy” and “architecture” reflected “a broad consensus” – consequently neither of the two current parties of Government voted against FSMA in Opposition.

A banking system that serves the real economy

Finally, we need a banking system that better serves the real economy – one of my principal concerns as Shadow Business Secretary is that it does a better job for British industry and our small businesses.
This is not just a problem of the recent banking crisis. We have had a banking system that is too concentrated – with five banks serving nearly five million businesses – for some time. And with too little diversity of business models – where if one bank will lend you money they all will, and if one bank won’t, they all won’t.

So we would reduce the barriers to entry for challenger banks to create more choice, building on the recent proposals of the old FSA.

We are delighted that Nationwide – a mutual – will enter the market for business lending next year.

We want more sources of alternative finance, from innovations in factoring like MarketInvoice or in peer to peer lending like FundingCircle which Labour local authorities are using to invest money in local businesses.

And we are arguing for a proper British Investment Bank, with funds distributed not through the existing bank network as in the Government’s proposal, but through a new network of geographically mandated regional banks – a British version of the German Sparkassen.

Therefore my fourth and final point is that if the sector is to do a better job for our wealth creators, we need not just more competition “in” banking but more competition “to” banks as well.

Conclusion

Let me finish by saying this: today, I represent many City workers in my Lambeth constituency. What they do matters enormously to Britain’s place in the world and to the growth of the global economy. Having worked in the City myself for several years, I know the overwhelming majority of people there, yes, want to do well, but are hardworking, honest people who want to do a good job for our country too.

But I also see on Streatham High Road, which runs through the middle of my constituency, the struggles of the businesses in other sectors who struggle to access finance and the long term, patient capital to grow. They are my constituents too.

All we ask is that in addition to providing a global hub which helps the UK compete, our financial sector does a far better job for them at home too.

Thank you.

Every day we hear from small companies who have great ideas, products and customers, but who still struggle to raise money from the banks to make their business work. Providers like MarketInvoice, however, are helping dramatically, matching lenders with borrowers in unexpected ways.
One particular area in which they can help is export finance. SMEs often can’t afford to fulfil orders from foreign businesses because they don’t have the liquid cash. 1 in 4 small companies points to finance as their main constraint in accessing foreign markets. When a small business exporting engines to a huge Brazilian company can’t get an advance on those sales purely because they are selling to a foreign company, the entire economy suffers. A great chance to leverage Britain’s exports, and with it a huge opportunity for growth, goes begging because the banks can’t or won’t take the chance on a small company.

Alternative finance can solve specific problems like this, however. By directly connecting savers with lenders through online platforms, it allows individual investors, who have a greater appetite for risk than at any point over the last half-decade, to get the returns they want. And the small businesses in turn benefit because those same investors, not caught in the quicksand of bureaucracy, and looking for decent rates, can lend money to businesses that need, deserve and can afford it. So for example, through MarketInvoice an investor with simply the willingness to take the risk, would be found to buy the invoice for the engines.

The government has, to its credit, seen the potential of alternative finance and diverted money into the sector. The Funding for Lending scheme, while it may not have been as effective as I would have hoped, has still gone some way to propping up small business lending.

But the private sector solution, alternative finance, is bridging the funding gap for small companies on a daily basis. Businesses like MarketInvoice and peer-to-business lenders have now proven themselves time and time again in the harsh world of finance. They have provided hundreds of millions of pounds worth of funding to business. They have conclusively shown that individuals and businesses want and need a new method by which they obtain the finance they require to provide their products and services.
Alternative finance is important to securing Britain’s future in another way as well. Financial services have been a major part of the British economy for centuries, and alternative finance is clearly at the forefront of innovation in a sector which had been stuck in its ways for quite a few years. For Britain to lose out on what looks to be a central pillar of finance in the coming decades would be a major danger to its hopes of recovery.

These are very young firms however, and without the branch networks of the banks, many small companies have still been left unaware that they have another option. As the only practical funding solution that has been found to drive this country out of the economic doldrums, alternative finance clearly should be central to the plans of both small businesses and government.

Read the full article online here.

It’s more efficient, and therefore more affordable, than traditional providers because it directly connects borrowers with lenders, missing out the bureaucracy of banks.

As traditional banks are reluctant to extend overdrafts or approve loans, small companies are finding it increasingly difficult to obtain the capital and finance to maintain growth, even in an atmosphere of renewed confidence. Many are caught in a ‘double credit-crunch’, between the banks who can’t or won’t lend, and corporates extending their terms of payment to upwards of 90 days.
However, in the last few years, nimble financial start-ups have begun to fill this growing gap by delivering business funding seamlessly via the internet.

These alternative finance companies like MarketInvoice are providing new ways to control cash flow, access funds, and better manage costs, in the form of equity investment, long-term loans or next-generation invoice finance.

It is no surprise therefore that small companies are increasingly overcoming the financial bottlenecks they face through alternative finance.

While total lending to SMEs has dropped by almost 7% over the last four quarters, MarketInvoice has increased its lending by over 500%. The alternative finance sector as a whole is growing extremely rapidly. While they were only financial minnows in 2010, these companies have now provided hundreds of millions of pounds to small businesses last year.

This is because alternative finance products are particularly suited to SME finance – they offer quick, affordable, and flexible funding – exactly what small businesses say they need.

On a basic level, alternative finance is wholesale finance. Small firms are lent money directly by investors rather than having it filtered through the bureaucracy of a bank. Just as individuals can now do their shopping online from huge warehouses through Amazon, small businesses can now get finance wholesale from MarketInvoice. It’s one step closer to the source and therefore much more efficient. It really is the future of finance.

How MarketInvoice works

MarketInvoice, an alternative finance provider, allows businesses to access the cash tied up in long-dated blue-chip customer invoices by funding them early through a network of professional investors.

The model is simple: companies choose which invoices they want to raise finance against and set a range of acceptable terms. Institutional investors bid to provide funding at the best price. The company remains completely in control to draw down funds whenever they are most needed.

MarketInvoice’s service has a few features which make its form of working capital finance the most customer-oriented in the market – no personal guarantees, no on-going fees, and no usage requirements. Through MarketInvoice, invoice finance has become one of the most flexible options for funding the working capital needs of growing businesses. Enabled by technology, small businesses can now get the finance they need to grow.

Read the article online here.

We’ve all heard about the contrasts between the venture and entrepreneurial scenes in the USA and Europe.

The prevailing view is that the US, especially Silicon Valley, is a more vibrant hotbed of disruption than the UK and Europe. Pools of venture money are funding U.S. start-ups, fueling a more compelling roster of Google-like successes.

A sector growing outside of the USA

But a certain niche has grown more mature and attractive outside of the US, and is largely focused around London. That new sector is known as “disruptive finance.”

Disruptive financial services businesses seeking to revolutionize the way we move money, save and invest, trade and speculate, and generally consume financial services are finding London a more fertile environment to launch and grow.

Apart from crowd-funding and P2P lending, which are established in the U.S., a number of start-ups and established businesses in London have found doing business in America to be difficult. Examples include Zopa, MarketInvoice, Transfer Wise and BetFair. Meanwhile, sectors like spread-betting are based almost solely in London.

Online gambling and trading has been one of the biggest winners of the Internet so far, and has grown in London. In the next stage of growing financial disruption, London is now best placed to nurture it and benefit from it.

There are many reasons for this potential trend: London’s financial infrastructure, our talent pool of finance professionals, and recent tax incentives, which have added more fuel to the fire.

[...]

Read the full article here.

At MarketInvoice, we have first-hand experience of this tech revolution as a business and as a finance provider. Our unique vantage point enables us to appreciate the pressing business needs of the tech sector as well as its potential.

The failure of the traditional finance providers to respond to this sector’s needs is a major hindrance to growth. For Britain to compete with tech development internationally, home-grown firms need access to finance.

There are three broad categories of tech companies, each funded in a very distinct way. Corporates have direct access to the capital markets, so their funding isn’t a problem. Early stage start-ups used to have particular difficulty getting funding, but there are now many well-publicised angel networks and venture capital schemes filling this gap, (although we have a while to go until we get to American levels).

The problematic and oft-ignored category is the squeezed middle: firms with strong growth, which aren’t yet profitable or have turned a profit but haven’t yet grown into tech titans, which are unable to get funding from the traditional providers. Many of our tech customers tell us how they can’t get funding from the banks on the sole basis that they’re tech companies. They don’t have the physical assets that facilitate lending under traditional models.

However, tech companies typically have an entrepreneurial bent, so are on the look out for new financial options, particularly tech solutions to tech problems.

As one of these alternative finance solutions, we’re helping 3D design companies, tech security companies, IT consultants and online marketplaces. Tech firms are likely to grow too quickly for their current cash flow, so using MarketInvoice allows them to accelerate their payments and get more staff onboard. The small overdrafts they’re able to get from banks simply don’t let them do this.

One particular example will serve to demonstrate the difference we’re making: Fabriqate, a mobile app developer, had a strong pipeline of work and ambitions to grow rapidly. However, the banks simply refused to countenance the idea of lending against work on apps. MarketInvoice allowed them to secure funding quickly against invoices from their high-quality debtors.

Alternative finance is helping dramatically for small start-ups as well, with crowdfunding networks like Crowdcube and Seedrs. But the biggest advances are being made in the middle ground, where companies that would typically have found finance difficult to obtain are now able to get the funding they need to grow.

This area will only grow in the coming years as tech companies move away from the restrictions of traditional providers to online platforms: tech firms like themselves who understand their business models and are appreciative of the unique funding needs of the tech sector. It seems increasingly unlikely a high-street bank will fund the next Facebook or Google.

I was recently invited onto Evan Davis’ BBC radio and TV show ‘The Bottom Line‘ for a discussion on alternative finance. Alongside me was Giles Andrews, the founder of Zopa – a UK peer-to-peer lending platform, and Michael Joseph, the former CEO of Safaricom, which set up M-Pesa, a mobile payment system, in Kenya.

The response since from businesses and the public in general proves that we have all heard more than enough about the failures of the banks in the last few years, but not enough about the positive changes that are happening in finance.

This question is especially important as commentators are beginning to talk seriously about a change in the role of banks. George Osborne told an audience of JP Morgan traders recently, ‘I want upstart challengers offering new and better services that shake up the established players’.

In recent years the finance industry has seen various new players, with some offering a full range of financial services and others aiming to compete with banks only in the provision of certain products. Many of these challengers are growing, and while 2012 saw their emergence, 2013 might see a move into the mainstream.

The day-to-day of banking is changing worldwide, and banks are not the ones driving the innovation. For instance, by some measures, Starbucks is among the 200 largest banks by deposits in the US, having $3 billion on their in-store card in 2012. Both Google and Amazon are also talking about providing finance to users of their marketplaces. At the other end of the economic spectrum, 31 per cent of Kenyan GDP now flows through M-Pesa, which is so simple it can be operated on a very modest Nokia phone and has no physical bank branch presence.

The development of networked technologies has played a big part in the development of these new finance providers. A number of new firms have harnessed the power of crowds to provide finance to businesses and individuals, with peer-to-peer lending and crowdfunding both emerging as important new models. Individuals walking down the street are using their smartphones to instantly fund loans that would once have been managed (or indeed rejected) by the banks.

Banks and their dominance in the lending market

In this country, four banks still control around 85 per cent of the business lending. However, their tendency to innovate is limited – in my particular sector of the market, working capital finance, there had been no innovation to speak of for 50 years. Yet new firms are popping up every month, offering a better way to run finance through the internet.

They are raising and using capital in ways that hadn’t been thought up ten years ago, such as Zopa or Ratesetter’s peer-to-peer lending models. They focus on a single area of finance, aiming to provide faster and more efficient service than the banks can.

On the other hand, ‘challenger banks’ such as Metro Bank have appeared, aiming to beat the big banks through their attitude to customer service. Aspects of what they provide are common sense; for example, they can issue new cards on the spot with in-branch printers and their branches are open every day with long hours, solving two common consumer bugbears.

For this higher level of service, these banks will offer lower returns and less cheap loans, but for some this is a price that is worth paying. Other banks, like Handelsbanken, aim to recreate the old, fondly-remembered, decentralised system of banking, where decision-making is delegated to individual branch managers.

Innovative crowdfunding options

In terms of business finance, a number of new firms are offering innovative new products. My firm, MarketInvoice, offers an online marketplace for invoice discounting for small businesses, allowing SMEs to borrow money from a collection of professional online investors (hedge funds and family offices), using their invoices from blue-chip debtors as security. Elsewhere Seedrs and Crowdcube offer methods of raising finance for early-stage companies from the public at large, and firms like Thincats are offering peer-to-business loans.

While there is a long way to go before businesses like ours are operating at the scale of the incumbents in the banking sector, there is no doubt that those businesses already using us are enjoying the benefits of the next generation of finance.

These new forms of finance, while appearing technology-driven, are driven by a simple premise – that in a newly connected world, there’s less need for intermediaries. Businesses need better access to capital and credit, while lenders want to know where their money is going, and that’s what the new players are letting them do.

Even the old guard is now facing up to the new reality. Sir David Walker, recently appointed chairman of Barclays, has said, ‘We want to move away from the significance of banks’. While the banks are clearly not disappearing any time soon, it does seem like technology and social networks, driven by non-bank institutions and start-ups, are increasingly going to shape the future of finance.

Read the full article online.