Time Finance plc (LON:TIME) Chief Executive Officer Ed Rimmer caught up with DirectorsTalk to discuss why forecasting, cash flow management and flexible funding solutions are increasingly important for SMEs navigating inflation, supply chain disruption, and wider economic uncertainty.
Q1: Ed, how important is it for SMEs to plan and forecast, particularly in these geopolitical uncertain times?
A1: I think it’s always really important for businesses to plan and forecast. There’s lots of things that can happen unexpectedly in businesses; supplier delays, production problems, and obviously those issues are heightened at the moment with what we have to contend with and what small businesses particularly have to contend with. Inflation is going up again. There’s certainly delays to certain sectors with production and suppliers moving around the world and obviously fuel prices are on the up. So, I think ever more important at the moment given the challenges that businesses have.
Certainly businesses will need to consider who they use for advice and how much time and effort they put into forecasts and planning. Because it may be things that slip through the net with the nature of small businesses in terms of being busy all the time and focusing on the today.
I think at the moment, it definitely needs a little bit more focus on the medium and longer term in terms of forecasting and planning.
Q2: What are the key financial considerations that SMEs should be making during this time?
A2: I think there’s obviously trading considerations to make. Do businesses put their prices up to counter, for example fuel prices going up? Is that passed on to customers? Supplier issues? Do they put prices up? Some businesses might decide to take prices down, depends what sector they’re in to capitalise on others’ challenges.
I think the real issue at the moment, the old adage, cash is king, is absolutely true. Businesses can be profitable, but they can run out of cash if there’s delays to product coming into their businesses or late payments, as I’ve mentioned. So, cash is certainly the main thing. It’s absolutely the lifeblood of businesses to keep the wheels turning and keep the businesses going.
So, focusing on cash availability, both in the short and the long term, I think is absolutely a priority at the moment.
Q3: With that in mind then, what funding solutions are available to business owners which can provide long-term growth opportunities and help sustain their business through the trading peaks and troughs?
A3: Well, there’s a range of financial services available. Lots of businesses will already utilise loans and overdrafts, probably less so now overdrafts. They’re not as commonly provided by banks. The banks themselves aren’t arguably as focused on small businesses as they once were. So, it’s really key to go and find the right facilities for the businesses at the moment and that could be not a traditional loan or overdraft, which can be restrictive. They tend to be fixed amounts, and they don’t grow in line with the company’s turnover, or they don’t counter for the peaks and troughs.
So, businesses could utilise asset-based lending, so invoice finance, asset finance or a combination of those things and there are a lot of providers out there with plenty of competition as well in the market. So, there’s good deals to be had. People are keen to lend money through asset-based lending and as I say, it can provide a lot more flexibility and it’s generally very cost effective when you compare it with traditional lending like loans and overdrafts. You can maximise cash availability from the specific assets that are on a company’s balance sheet.
Q4: Finally, what are the benefits for SMEs in working with a broker to help them secure funding?
A4: The broker and introducer market is very extensive in the asset-based lending market, particularly, and I think they provide expertise and advice and help people, small business owners navigate their way around what can be quite a complicated myriad of lenders and what they do and what they like and what they don’t like.
So I think the broker and the introducer role is really important, particularly at the moment where some people might be looking for the first time for these facilities. It can take a long time, and a broker can short circuit that process. They have the relationships in place; they have the expertise and knowledge in place of what certain lenders will do and they’re able to match a business’s requirements with a lender’s appetite of what they want to do. So, it can be really useful. It can provide expertise and it can provide a bit of an aid and a friend, if you like, to a business to find the right solution for them.
I would certainly recommend businesses utilising introducers. They can be brokers, it could be accountants and it could be consultancy-based businesses as well. There’s lots of support out there for businesses who are looking to source finance.
Time Finance plc is a UK-based specialist finance provider focused on supporting SMEs with flexible funding solutions. The company offers asset finance, invoice finance and business loans designed to help businesses improve cash flow, invest in growth, and manage operational challenges.
