By Nick Sellars, Group Managing Director
In March, there were millions of us suffering from the blow of being denied entry from our favourite hostelries, then sitting with baited-breath hearing Boris’s announcement on TV of total lockdown in the UK, to join our neighbours in the rest of Europe.
So what does a business like ours do in such a circumstance when suddenly we are unable to travel to work and enter our premises to ensure that we can service 150 business clients that need cash daily, and have to get through the next few months facing the same predicament?
It comes to mind that we have a disaster recovery plan and we have to put it into action. Being a relatively new business and founded in an era of advanced telecommunications and digital technology, the transition was quite simple. All our data, accounting and operational systems are cloud-based. Our telephone system is VOIP enabled and we bought in sufficient devices and laptops to enable every member of staff to work remotely, without interruption.
I’m clearly getting old but I was particularly impressed that we could unplug a phone in the office and plug it into our laptop at home, and we could take and make landline calls as if we were still in the office.
So within an hour we were fully capable of operating remotely as a business up to 100% effective. This is when our staff really earned their stripes. We spoke in detail to every single client to see how they were coping not only with the transition, but also with the possibility that their market may have disappeared overnight with little knowledge of when it may open up again. Some clients’ prospects were disastrous, some were partly bad, some thought they would be able to operate reasonably and some thought that business might increase. It was enlightening to realise that all had a plan to come out of the other end, albeit that hibernation might be part of the action plan.
There is no doubt that the Government’s furlough scheme and other similar initiatives will have helped many businesses to stave off execution. However, such assistance may prevent businesses getting back to normal quickly as some become comfortable with that respite. Time will tell.
As, among many things an invoice finance provider, providing of working capital we need to make sure that we are available at all times to ensure our clients have the right amounts of cash to keep them afloat, and to answer any queries or try and assist with any problems they may have in getting through this period. I believe we have done a great job in assisting and doing the right thing. This has meant funding outside our normal guidelines by understanding what our clients’ businesses are facing during this period. It hasn’t helped that capacity and risk appetite in the Credit insurance market has been severely curtailed, particularly in the retail and construction sectors. This capacity has a direct effect on the amount of funding we can make available against the debt owed from clients’ customers, so we have to perform a fine balancing act in servicing our clients’ needs, whilst not being overexposed ourselves.
The overriding factor in achieving success or even effectiveness during this crisis is great communication. It is using the phone and the various video conferencing technology to ensure we speak to each other individually and in groups as staff, and we do the same with our clients, our introducers and our counterparties. I think we, as well as many others, have really upped our game in this respect, and those businesses set up to provide good customer service should have done well in the circumstances.
All the communication in the world will not have prevented the ‘falling off the cliff’ of client sales turnover across the business spectrum. As much of our invoice finance revenue is based on client turnover, that in itself causes our kind of business a big headache, because we can’t just switch off our costs. If we furloughed our staff, we couldn’t service our clients.
So, what do we do? Well, we do more new business and replace the lost turnover with new turnover. It sounds easy when you say it quickly. To some extent our secured lending business is not affected in the same way, so we are ok there. What has happened in the wider market is a number of businesses have been denied the cash and support they need. We have remained open to new business and our introducers have managed to place this business with us.
Our superb staff have jumped on that business, and turned it round in record speed such that we have replaced lost revenue and we are very proud of that. In May alone we funded £5 million of new facilities. Once more, as our existing clients start to climb out of the mire and start selling again, and even now we are seeing those green shoots start to push though, then we will be in a fine position to grow our business even more as the year develops.
We will explore the different angles of this pandemic in further articles on the subject. Until then, keep safe and be positive!
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At 4Syte we strive to be different from the typical finance providers. We look beyond “here and now” and focus on what we do best, by providing Financial Peace of Mind.
If you would like to speak to us about any of our services, then please do not hesitate to contact us. Our team of experts will be more than happy to talk to you and answer any questions you might have.