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Tech-decisions by Steve Box, International CEO, Bibby Financial Services

In the latest Bibby Blog, International CEO at BFS, Steve Box discusses investment in technology among global SMEs and how asset based financiers can help.  

With the UK media gaze set firmly on 23 June 2016, it’s easy to forget that the UK’s place in the EU isn’t the only decision impacting businesses this year. The reality is that it’s one of many decisions facing SMEs today and a dilemma that is facing just one geographic corner of the business population.

While there are nuances when it comes to the challenges encountered by businesses in different locations and sectors, there’s often a common thread that unites the experiences of SMEs around the world. Payment terms, recruiting leading staff, accessing finance and generating sales are all challenges routinely faced by businesses irrespective of size or geography, for example.

And today, there’s a topic that transcends location and binds businesses (and individuals) even more so than ever before.

Tech-invest

Technology has revolutionised the way in which businesses – small and large – operate. Whether through operational systems improving back-office efficiency, e-commerce solutions enhancing transactional capability or digital and e-marketing platforms helping businesses to communicate on a wider scale, the opportunities presented by new technologies have radically changed the way organisations in all sectors do business.

However, the financial capability to invest in such technology is often limited to larger organisations with deep pockets and financial backing.

Last month, data from research and consultancy group, Celent, found that North American banks collectively spent $62.2 billion on technology over the last year. The same research found that European banks will grow their technology focused investment to $70.1 billion in 2017.

While the intentions of larger financial services organisations are evident, there is also a clear desire among small and medium sized businesses to invest in enabling technology.

In December 2015, we  surveyed more than 700 businesses throughout Germany, Ireland , France, Poland, the UK and North America to evaluate the challenges they face today and to identify their investment intentions over the months ahead. One overriding theme was technology.

Almost half (45 per cent) of the businesses we surveyed said that investment in technology was a key priority for them, compared with 37 per cent looking to invest in recruitment. While technology itself is a broad spectrum, emphasis was firmly on IT systems as opposed to machinery (29 per cent) or commercial vehicles (22 per cent).

Funding investment ambitions

While the desire to invest in new technologies to facilitate business growth among smaller businesses is clear, the financial means to support this growth is often not aligned with these ambitions.

A third of the businesses we spoke with in December told us that making the assets within their business work harder was a key priority and it’s here that asset based funders can help.

I recently spoke at the Commercial Finance Association’s (CFA) 3rd annual conference on Factoring & Supply Chain Finance in Miami, which featured contributions from CIT Commercial Services, Wells Fargo Capital Finance, Crestmark Bank and Rosenthal & Rosenthal.  It’s perhaps not surprising that we agreed on the benefits of receivables finance, but another thing members had in common was examples of how the provision of funding is supporting clients’ investment plans.

Making assets work harder and unlocking working capital for growth is fundamentally at the heart of receivables finance. At a time where businesses are reluctant to take on further debt, unlocking value already held within their businesses is a fantastic  alternative and a source of finance that more and more businesses are turning to.

Research from Factors Chain International in 2015 found that domestic and international factoring has grown at a rate of 11 and 14 per cent respectively since 2009 and in 2014 global factoring surpassed EUR 2.35 trillion in annual volume.

In my own experience at Bibby Financial Services, we’ve also seen fantastic growth in businesses unlocking working capital through invoice finance. In the past year alone we have increased funding to businesses in Europe by a quarter and this growth is something we’re seeing throughout the world.

At a time where small and medium sized businesses have their attention set firmly on technological investment and leveraging owned assets, asset based financiers can play a key role in helping these businesses achieve growth in both domestic and international markets.

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