Does your bank play a major role in your business? How can businesses get the financial advice they need?
Businesses are now spoilt for choice when it comes to accessing funding options to fit their long-term financial needs. With a wide array of options available, how can SMEs choose the right bank for them? And how can businesses access financial advice to help them along the way? Speaking on the second day Elite Business’ live event on March 10, Phil Hobden, Head of Education at Capitalise, Adrian Blair, CEO of Receipt Bank, Lucy Mullins, Co-founder of Stepladder and Randy McFarlane, Head of Strategic Partnerships and Alliances at Bottomline, spoke about how business can access financial solutions for continued growth and how to build important relationships and gain knowledge during their funding journey.
With all the funding options out there, it can become increasingly difficult for businesses to pick the right bank for them. Instead of finding a bank that caters to all their business needs at once, companies can choose to incorporate additional tools and services on top of their current banking, providing them with better financial solutions that fit their business scope. In reality, there are so many different businesses out there that can tap into your bank data through open banking, Adrian, CEO of Receipt Bank, said. Just because your bank happens to be x, y or z, doesn’t in any way constrain you or prevent you from using anyone else’s services.
Most banks offer similar products to businesses through various funding options. So, what makes one bank stand out from the other? Randy insisted a bank should be a partner to you and your business, while Phil stressed the importance of building a relationship with your bank manager, and that banking should have an element of personal touch. I think choosing a banking partner, the keyword here is ‘partner’, and there’s never been so much choice for SMEs out there, Randy, Head of Strategic Partnerships and Alliances at Bottomline said. So, you mentioned some of the ‘cool’ names on the block, when I think of some of the collaboration tools that they bring to the table, ways in which you can track your expenses, give you that feasibility, give you that control, give you that interaction, use of mobile of course, so you’re taking that bank with you supporting you everywhere, along with all the funding options of course.
Phil Hobden, Head of Education at Capitalise, added: Ultimately all banks offer the same product. For me, certainly now, it’s about the relationship. And if you’ve got a level of turnover that affords you a relationship manager, that bank will mean a lot more too because you got a personal connection. If not yes, then a bank is just a bank.
Meanwhile, Adrian stressed the importance of building a relationship with your company’s accountant and seeking advice from them. No better person in your business can offer you valuable financial advice that can help take your business to the next level ‘ and don’t be afraid to ask for that favour, Adrian said. Our view of Receipt Bank is the personal relationship that has the potential to do the most for you is your relationship with your accountant, because that’s the person you’re paying fees to, he added. And they don’t all do this, but your accountant is in a position to offer you really valuable advice and make an impact on your business in a way no banker out there is going to do for a small business owner. What I would say is demand that sort of service from your account and actually, the leading trend in the accountant profession is, accounts say: ‘We don’t just want to do the compliance, we want to do more. We want to get closer to the day to day operations. So, they’re chomping at the bit to do that.
When it comes to funding, SMEs need to ask themselves what their business truly needs. Sometimes, a business may require more than just a bank loan and would benefit much more from ‘angel investors’ or experts in the field to mentor and provide them with financial advice throughout their journey, which can aid in continued growth. Meanwhile, alternative funding options, such as crowdfunding, peer-to-peer lending, or grants, may be more suitable for the needs of your business.
“You have to ask yourself what you truly need as an entrepreneur, Lucy Mullins, co-founder of Stepladder said. And I think there’s a lot of transactional services out there, you can go into one of these banks and they will give you a bank loan, but what is it that you want? And so, the route we took is that we had a really good network of angel investors. But they had different expertise in different areas. And bringing Stepladder to market, we needed people that could help us with the credit underwriting and advise on that side with relationships with mortgage brokers, with solicitors, with surveyors, so when we were thinking about our angel network, we wanted to experience in those areas.
Touching on Lucy’s point, Phil stressed the importance of reaching out to other businesses and seeking advice on how they raised their capital, as every company’s funding journey starts differently. If you are at that seed early start-up stage is to look in the market and see who’s done something similar in a similar industry, and reach out to them and see how they raise their capital, Phil said. Because actually, no journey is ever the same. Some businesses will start on a mountain of debt, some will start on a mountain of equity. So, no business journey is ever the same.
Speaking about his biggest advice when it comes to funding, Adrian noted: It’s not about the number of people you talk to, it’s about how well you get to know a small group who are very likely to do it. What I realise most conversations you have and most time you spend in these processes is time wasted and there aren’t that many people out there who are seriously going to back your company. So, narrow it down sooner than later and then really get to know those people.
Late payments can cause endless problems for small business owners. With a wide number of options available in the market, SMEs can access better tools to tackle the problems they may encounter, which can help maximise their growth, protect their payments and help them stay efficient. Certainly, with businesses that we work with, late payments are their biggest pain point. There are two things I advise. Number one is to stand up for yourself. There is legislation in place today that prevents large companies delaying payment or going over terms, so ask for the money. But the wisest thing that you can do is to put in place solutions and invest in solutions that will enable you to make those payments regularly. So, one of the things that we do a lot is particularly micro-end of SMEs. To get on to direct debit, normally you have to be sponsored by your bank. But we sponsor them, we take the risk exposure and then we put in place that capability so they can concentrate on doing what they do best.