According to Dominic Buch, Co-Founder and Managing Partner at Caple, in order to support that growth, many CFOs will be expected to examine and recommend suitable funding solutions.

Finding an appropriate form of finance is more complex than it used to be. For most of the twentieth century, business lending was based on the value of a company’s assets such as property, stock or invoices.

To help firms access funding, finance directors have therefore developed a good understanding of how lenders would assess their company’s physical assets.

However, today, companies are more likely to be investing in intangible assets such as data, software or a strong brand than tangible ones.

This investment in intangible assets has spurred growth and innovation. But using them as collateral to borrow against remains difficult. Although value is built in intangible assets, finance is raised against tangible ones.

Without a new approach to funding, finance directors, especially in asset-light sectors such as professional services, technology or media, may struggle to find suitable funding for their business.

The growth of the intangible economy

As most finance directors would recognise, companies now build and grow through investment in intangible assets, alongside a continued focus on human capital.

We can see this from the businesses that succeed today.

Airbnb is valued at $35bn because of its network and data, not because it owns apartments. Google has become a global behemoth because of its algorithms.

These companies are valued so highly because of their intangible assets, including the skills of the people that develop them.

The same is true of many smaller but growing businesses too. Service-based businesses contribute around 80% of UK GDP and more than £160bn in annual exports.

For instance, growing financial firms, technology companies and media businesses rely on intellectual property and brand to stand out from their competitors.

But because financial standards have not kept pace with these changes, finance directors may struggle to accurately value their asset and their business.

The challenge accessing capital

Intangible assets present a challenge to traditional lending models based around recoverable security such as property or machinery.

If a company with physical assets goes out of business, a bank can recover its money by selling those assets. Lending decisions can therefore be centred around the value of the assets, rather than the performance of the business.

Intangible assets are less transferable, they cannot easily be recovered and sold to a new owner.

As a result, businesses with intangible asset bases find it more difficult to access debt finance, regardless of the strength of its operations and the associated cash flows.

When asset-light service-based businesses sector are such a vital part of the UK economy, this puts a brake on growth.

How unsecured lending can help

Traditionalists will say equity funding through venture capital or private equity is the solution. Often that holds true.

However, as finance directors will know, third party investment, does not suit every sector, firm or business owner. It also dilutes ownership.

Instead, asset-light companies can now benefit from unsecured lending, based on an understanding of the future cash flows generated by the business, rather than the value of physical assets.

Working with external advisers such as an accountant or business advisor, finance directors often play an important role in helping their business access the right funding.

Both by identifying suitable lenders and in supporting the development of the forecasts and business plans central to a credit process based on future cash flows.

When expanding businesses are important for both jobs and growth, we need to do all we can to help fund them.

We need a new approach to lending where finance directors can help their firms access the right growth funding for them.