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We often see the biggest disruptors thrive in times of change, very often as a result of economic challenges. It will come as no surprise, therefore, that the likes of Netflix, Uber and even Airbnb all rose to prominence after the financial crisis in 2010 simply because they all provided solutions for consumers facing very real problems in a time of change.

Each brand delivered convenience and financial savings, using the very latest technology and a shared economy model that created new, exciting, and inherently better experiences for consumers. This is exactly what consumers wanted, and it helped spawn a host of new markets.  

It is this model that is powering a revolution in the card payment market today- one that has so often been at the forefront of change and innovation in its own right. Today’s consumers – banked or unbanked – are demanding more from their suppliers, forcing them to reinvent themselves and their product offerings. This is happening while the financial services industry as a whole is facing increased regulation.

The Disruptive Consumer

Historically, brands and service providers have always relied on consumers basing their purchasing decisions on basics such as service levels and fair pricing.

But the modern consumer has developed far higher expectations based on a host of new metrics such as personalised interactions, proactivity, and even whether a company can offer a connected digital experience.

Today’s consumers are disrupting traditional buying patterns and businesses, demanding elements such as cloud, mobile, social media and AI to deliver an immediate, valuable and personalised experience. They have learnt from Netflix and Uber, and any business that fails to address this will fall by the wayside.

But the disruptive consumer does not stop there. According to research from Capita, over half (56%) of all consumers said it was important to them that their bank or building society acted sustainably and/or ethically. This does appear to be a direct result of the pandemic and increased awareness of the climate crisis, with consumers taking time to reappraise what’s important to them.

Put bluntly, these views have been extended to those businesses where they wish to spend their money. Millennials are leading the charge in this ethics revolution, with 60% claiming it’s important, followed by Boomers (57%) and Gen X (39-53 years old) on 55%.

Democratisation of Financial Products

Financial inclusion matters and is the cornerstone of economic development. When people have a bank account, it enables them to take advantage of other financial services like saving, making payments and accessing credit.

According to The World Bank, 71% of people have a bank account in developing countries today, up from 42% a decade ago, while globally, 76% of adults around the world have an account today, up from 51% a decade ago. These tremendous gains are also now more evenly distributed and come from a greater number of countries than ever before.

But this still means some 1.4 billion people remain outside of the traditional banking sector. These tend to be the hardest people to reach – very often women, the poor, the less educated and, very often, those living in rural areas.

While digitising payments is the way to go, much more is needed. Governments, private employers and financial service providers – including FinTechs – should work together to lower barriers to access and improve physical, financial and data infrastructure. This means FinTechs need to build trust and confidence in using financial products, develop innovative new products, and implement a strong and enforceable consumer protection framework that will include these aforementioned individuals.

After all, the unbanked and the underserviced sector is today the greatest untapped market opportunity for many FinTechs.

The Integration of People and Technology

The evolution of technology is at the heart of efforts to better serve customers. Adopting new technology is, therefore, critical for financial services organisations to thrive.

Progressive financial services companies are on the lookout for new technologies to improve efficiency and speed of service, as well as provide a better customer experience.

This is without doubt a direct result of the competition faced by consumer brands like Amazon, Facebook and Google.

Even before the pandemic, customers increasingly expected easily accessible and fully personalised digital products and services. As a result, financial institutions were already rethinking processes, expanding tech investments and testing new applications.

Incumbents have traditionally looked for technologies to increase efficiency and lower costs. FinTechs, by contrast, start with a customer problem, identify ways to address it with digital tools, and then build new business models around digital solutions.

The digitisation of financial services is ongoing. Enterprises have a choice: make innovation the focus of a stand-alone organisation or integrate it throughout the business. The winners in this race will be the ones that marry technological innovation with the expectations of today’s consumer.

The Progressive Consumer

Over the last few years, some of the most influential global financial institutions have committed to reducing emissions attributable to their operations. They have also pledged to reshape their lending and investment portfolios to produce a net zero carbon footprint by 2050.

ESG is big business. Banks are restructuring to adopt green pledges, and FinTechs are developing new solutions to address climate-related consumers and issues, all as part of detailed, overarching ESG strategies. ESG-focused FinTechs in particular have a unique ability to achieve rapid growth, deliver sustainability-focused innovation, and attract investment capital to support their efforts to improve the environment and society, all while generating substantial returns. All of this is being done due to the requirements of an ever-evolving and demanding consumer.

The climate-centric FinTechs in the payments sector driving the biggest change are the ones focusing on influencing the spending behaviours of sustainability-minded consumers. By engaging with this demographic, FinTechs can sustain their revenues by aligning financial transactions with ESG goals.

Over the past decade, new digital FinTechs have begun to transform and disrupt the financial services sector. Technological advances in finance are not new, but progress has arguably accelerated in the digital age due to improvements in mobile communications, AI, machine learning, and information collection and processing technologies. This revolution was matched by an extraordinary increase in consumer expectations.

The payments market in particular has experienced a rapid proliferation of digital innovations that make payments faster and cashless. Consumers in advanced and emerging markets have increasingly adopted FinTech services because of their convenience and lower cost. The challenge for both new and existing firms is to create and deliver new financial products and services as they strive to compete.

Founded in 1936, União Química is one of Brazil’s largest and most robust pharmaceutical companies. The IFC loan will be used to further the expansion of União Química’s production capacity, vaccine infrastructure and energy efficiency projects. This will be achieved by directing funds towards the modernisation of the company’s plants and the boosting of its production capacity for vaccines and medicines, furthering União Química’s goal to join the international vaccination system and offer immunisers to Latin American nations.

The Becker Glynn team was led by partner Peter Hosinski and associate Tianpu Zhang, who (along with other firm members) addressed, inter alia, the drafting intricacies related to a real-denominated loan that was repayable in dollar-equivalent amounts.

How do you approach business planning for your clients, and what steps do you take to ensure that their long-term financial goals are met?

As with any planning, information is key and we, therefore, require information from all the key individuals, directors, trustees, and the various entities of our clients. This includes identification documents, registration documents, letters, or minutes of authorities-, partnership-, trust- and existing loans and even personal agreements.

Our approach is quite simple - we strive to succeed in making sure that each individual and each entity take care of their own financial requirements, assets and obligations. Every solution must provide in such a way that all parties can honour the financial obligations independently from each other in the event of death, disability, severe illnesses, and any other event in the change in ownership.

This requires discipline, continuous administration, dedication and discipline from clients and the willingness to work with you to plan, implement and continuously monitor solutions.

Can you discuss a time when you had to navigate a complex business issue for one of your clients, and how you approached the situation to ensure the best outcome?

Business owners rely mostly on the advice of their accountants or auditors, merely because they are involved with capturing transactions and financial statements and see to the tax requirements of the entities and individuals. This is also because they are forced to file tax returns. They sometimes rely on the advice of their lawyers and many times to a lesser degree on the advice of their financial and trust/wealth advisers.

Independent advice from each of these professionals, each with their own proposed solutions, often confuses and conflicts clients in achieving their goals. After all, there are many ways to travel.

This brings us to the challenge. Business owners create wealth through their business activities. Clients must set up their wealth and asset protection plan as priority number one. Trusts form part of an extremely important component in building, protecting, and preserving wealth, and by using trusts properly, clients can avoid or minimize death and transfer taxes like estate duty, executors’ fees, transfer costs, capital gains tax, etc, just to name a few. This is the most cost-effective way to address continuity.

Trusts, however, require another discipline and must be managed and administered correctly. The success and protection that trusts provide are determined in court by minutes or documented trustee decisions, and not by up-to-date financial statements.

Clients need to appoint an independent captain for their fleet, and this person or company should collaborate with accountants, lawyers, financial advisors and asset managers to achieve and manage the long-term wealth and security of businesses.

The challenge always lies in convincing clients to appoint this captain of their ship and let this person control the documented requirements.

How do you stay current with changes and developments in the South African business landscape and what resources do you use to keep up to date with market trends and best practices?

As a member of the Fiduciary Institute of Southern Africa and the Financial Planning Institute of Southern Africa and as Financial Services Provider licensed by the Financial Services and Conduct Authority and being a registered tax practitioner, we must complete a certain amount of continuous professional development hours on an annual basis.

These hours that we must spend can be via studies, seminars, training or reading of financial articles and must be documented and submitted to the various bodies annually, to adhere to requirements.

I am still a student and am more careful now working with clients than I was when starting in 1992. Learning is a virtue, and one can never think you know it all.

Can you discuss a time when you had to collaborate with other professionals, such as lawyers or accountants, to provide comprehensive business planning services to a client? How do you balance the needs and concerns of different stakeholders to achieve the best outcome for your clients?

We have close relationships with an accounting firm since 2006 and with a legal firm since 2008, with whom we collaborate daily when needed.

All stakeholders, however, must have and work towards a common goal. My experience is that the alter ego of different stakeholders very often leads to plans that fail.

It is almost impossible to provide business planning advice without collaborating with other professionals and every professional should buy into one plan, work towards it, and monitor it regularly.

How do you advise your clients on risk management and contingency planning in their business planning, and what steps do you take to help them prepare for unexpected challenges or opportunities?

The very basic principle to follow is to keep proper records, firstly in date and secondly in subject and document order, preferably in a secure cloud so that it is easily accessible. Every authorised individual involved in the business must become so used to work with and store records. It takes 30 seconds to store a document, but it very often takes hours and sometimes days to search for it if you don’t.

Deal with every risk and opportunity separately - a one fix for all is a recipe for failure.

Make the people in your organisation feel special and trusted; it makes big decisions easier to implement.

Provide for the unexpected as far as you can, but remember a business is a journey; strive to enjoy it.

Businesses are in a state of constant flux. They are either moving forward or in decline. When a business is in decline, there are opportunities to turn things around at various stages of the decline curve. Taking action early can be done while funds are still available. Left too late, the turnaround must be done under liquidity and creditor pressure in the “zone of insolvency,” where a liquidity event could trigger the need to file for insolvency protection. In most jurisdictions, this is a statutory obligation, usually defined as the inability to make payments as they fall due in the normal course of business. Although this may be a clear legal definition, in practice there can be some flexibility in this definition, particularly where a viable business exists and processes are in place to stabilise and rectify the adverse cash flow.

A well-managed turnaround is in the best interest of all stakeholders. However, priority must be given to ensuring that creditors are not put in a worse position than they would be in an insolvency. It is therefore imperative that cash collateral is not impaired during the process. To achieve this, a robust and effective cash flow management system is required.

The most effective tool for cash flow management is a 13-week cash flow model with sufficient detail to highlight the important receipts and payments. The model should build in critical payments and significant cash receipts, showing a weekly cash receipts total and a cash payments total, along with a net cash generation or deficit and a closing cash balance compared to funding facilities and a closing headroom. This should be positive across the period if insolvency is to be avoided. The report should be finalised before business closure at the week's end, and variations of actual to forecast challenged, with people held responsible for shortfalls in performance. A revised forecast should be issued with achievable objectives; no moving goalposts! Peaks and troughs should be levelled out by realistic management of creditor expectations. All senior management should be aware of their responsibilities. They should know that they are part of the turnaround process, that they have obligations to a changing level of stakeholders, and that for them, it is not "business as usual."

The most effective tool for cash flow management is a 13-week cash flow model with sufficient detail to highlight the important receipts and payments.

Most turnaround managers would focus early attention by taking management control of the cash forecasting and cash management process. Cash control is the number one priority at the initial stage of an engagement. Only when the cash burn is stopped, cash flow is stabilised, and accurate forecasting is in place, can essential decisions on business viability and operational improvements be made. Controlling payments is an obvious first step, but some payments are critical, such as payroll and essential services like telephone and utilities, which usually cannot be delayed. There will also be pressing creditors for critical goods in the production process that will need careful management. The calming presence or intervention of a turnaround manager will often help achieve an acceptable payment approach to what had probably already become a fractious relationship. These payments must be factored in as priorities in the cash forecasts and adhered to. Failure to honour agreements or other essential payments can precipitate a more critical situation.

While most pressure comes from the creditor side, there can also be a positive cash flow benefit from challenging invoicing and billing processes or resolving other disputes or cash generation activities. On one assignment, a large company's invoice dispatch process was handled remotely from the team responsible for invoice calculation, resulting in a time gap of many days between work completion and invoice dispatch. Accelerating invoice preparation and dispatch generated a significant one-off cash bonus that alleviated creditor pressure. On another assignment, a long-outstanding and significant VAT receivable from an overseas customer had been left unresolved and filed in the "too difficult" folder. Diligent investigation by the turnaround manager resolved the issue positively. In another instance, a company was entitled to a large tax loss refund, but due to delinquent filing of accounts and tax returns, the refund had not been claimed. Addressing this issue helped alleviate creditor pressure. In another case, when a company's payroll was in jeopardy, a solution was found by selling a valuable but no longer business-critical license agreement to an overseas producer. Such situations are not uncommon in poorly managed businesses. By challenging accepted practices and thinking creatively, surprising benefits can be achieved.

From experience, it is often the case that accounts receivable collection has been neglected or handled at too low a level. Aggressive debt collection and payment inducement through fast pay discounts can uncover a treasure trove of low-hanging fruit that can buy time for more permanent solutions to be implemented. In some cases, customers whose suppliers fail may experience production disruptions and may be open to temporary "fast pay" processes while the turnaround is achieved. It is surprising that in such crisis situations, senior management often considers accounts receivable collection to be below their status level when, in fact, the survival of the business depends on it. Other short-term solutions may be available. Disputes and warranty issues can be resolved positively through senior-level involvement. Collections may be delayed due to disputes over only a portion of an invoice, and a small concession in such cases may unlock a larger payment. However, understanding the reason for the dispute can also be enlightening. Warranty claims and service level disputes may reveal underlying business and performance issues that are at the heart of business underperformance and are pointers to where operational changes are needed to restore the business to profitability and positive cash flow.

Cash pressure can have severe consequences in group companies, especially where there is inter-group trading. Local finance managers may become cash hoarders and hold onto cash for their local interests. In groups, cash flow needs to be managed on a consolidated basis, and a senior-level manager should have close control over the process, authorising and approving payments over a certain level. There may be a tendency to understate local cash availability in reports sent to head office, so vigilance should be exercised, and cash flow reports should be checked for accuracy against bank statements. A group approach to critical payments should be adopted to ensure that local subsidiaries are not prioritising non-critical payments ahead of group needs. Good practice is to allow local authorisation for small payments, making up the majority of the number but a small proportion of the value, while focusing control on the larger payments, which make up the majority of the value. Local sales subsidiaries should be aware that they depend on the manufacturing entities that have pressing supplier needs to maintain production. This can be particularly acute in industries that have significant seasonal variations or protracted plant vacation shutdowns.

As the turnaround process unfolds, cash flow management becomes routine, and business disciplines become embedded as better practices. Operational improvements revealed during the cash management process can be implemented. Opportunities for better asset-based funding may arise with improved cash management disciplines. The downward momentum on the decline curve will have been reversed, and the turnaround will be underway. However, continued vigilance on cash management is crucial. It is the foundation upon which the turnaround is built and should never be forgotten.

At the height of her career 10 years ago, Chloe realised there wasn’t a sustainable leadership solution that addressed both sides of the gender (in)equality equation: the female leaders and the system they are part of. This passion and frustration led her to change her path and specialise in designing bespoke and experiential leadership programs through Hello2morrow to help female leaders strengthen their confidence and for organisations to develop a truly inclusive work culture.

Today, Hello2morrow strives to inspire leaders to see beyond present barriers and help people make meaningful connections with each other and through their own experiences to stimulate positive change and promote gender equality.

Tell us about your story and what brought you to where you are today.

Parts of my story share similarities with many female leaders who have struggled through a male-dominated system – having to choose between career success and family priorities and trying to establish what “success” really means to me.

I was always good at maths at school. After university, I qualified as an accountant with the big 4. My career took flight when I moved into a senior finance leadership role in an FTSE 100 company. In 2005, I chose to follow the next path and started a family of two gorgeous boys.

But coming back from maternity leave was destabilising. The change in attitude towards me as a senior female leader and a mother was obvious. I felt conflicted with the language that dictated what success should look like for a high performer. It was a subtle, almost unspoken language. But it was there, and other people’s definition of success began taking over my life direction. “Oh leaving early….(it was 5.30 pm)”, “Enjoy your day off ….(when working part-time)” and it went on.

Needless to say, I left, believing that I couldn’t continue up the career ladder, I moved on to a new senior leadership role at an exciting technology and data start-up. I was thrilled to work with an innovative and energetic team of young people. But again the poor culture at the C-suit level dragged the organisation down to a slow decline and eroded my confidence. The inflexible structure, designed for men, was breaking me from the inside. I was constantly exhausted and struggled to balance motherhood and the expectation of what my role entailed.

I also knew I was paid less, working as many hours, and bringing in as much business. But my efforts all went unnoticed. Thinking I had no other options, I resigned without a job lined up. I didn’t speak about it to anyone thinking I had failed, and couldn’t function. At the time, I had lost my confidence and thought that women couldn’t have both a family and a successful career.

It wasn’t until January 2015 that my coach – who was instrumental in helping me get to where I am today – helped me figure out who I was and what I wanted in life. It was during this time that I realised how deeply rooted my struggles were in a system that wasn’t built to help women succeed. It became my purpose to help other women struggling in a male-dominated workplace.

Out of this experience, I was able to develop my self-awareness and regain my confidence. I became drawn to how human behaviour works, especially in cognitive diversity and diversity of thought. This interest turned into a passion, which led me to develop my coaching service and inclusive leadership programs at Hello2morrow.

Everything that I bring into Hello2morrow comes from a place of vulnerability and 25 years of learning through my lived experience. I’m proud of how far I’ve come, having worked through my darkest moments and discovering my true values, passion and life goals. I hope my story can inspire other women to tell their stories with pride.

What is the mission of Hello2morrow?

At Hello2morrow, we are passionate about empowering female leaders and developing inclusive cultures for organisations. We work on both sides of the gender equation and offer bespoke coaching and inclusive leadership programs to help organisations address gender imbalances and create an inclusive work culture for all women to thrive with confidence.

At the core of our pioneering programmes stems our curiosity about human behaviour. We incorporate the principles of reverse mentoring, growth mindset and values-led leadership to help individuals and organisations identify different ways to connect with each other and unlock new ways of thinking. The results deliver both inclusive leaders and improved business decision-making.

We also address issues related to unconscious bias through the experiential nature of our programs, which succeeds in trust and collaboration. This offers participants an inclusive space to highlight important issues about gender, race, ethnicity and foster curiosity positively.

Crafting important industry conversations is also an essential part of our work as we move towards a diverse and inclusive future where female leaders can flourish with purpose, and inclusive and authentic leaders can thrive through the power of human connection.

In your opinion, how can we nurture female leaders? 

Nurturing female leaders is about giving them the right structure and support that they need to become the best versions of themselves and succeed in their roles as leaders. Instead of treating women like they need rescuing or fixing, they need to be given the same opportunities as everyone else to thrive.

As one of my clients says, “I’m not an activist. I’m just being honest.” Having conversations about diversity and inclusion and gender equality must be conducted with honesty and respect for everyone at the table. The truth needs to be shared and feedback needs to be given – otherwise, nothing changes.

Bringing women into the conversation, regardless of their role or grade, is necessary to help an organisation articulate what is actually needed in its inclusion strategy. The people at the top often make the poorest assumptions about what is needed. Including all perspectives and valuing everyone’s opinions can help decision-makers make the right decisions and initiate the right (often simple) adjustments.

What’s more, encouraging a culture of allyship between women is a great way for them to inspire and empower each other as they progress in their careers. It’s not about shining a light on one woman’s success. It’s about emphasising that there’s room for all women to grow and progress.

Women also need a trusted source of advice to impart experience and support to help them find their voice. This can be a role model, mentor, coach or sponsor within or outside of the organisation. But it is really important that this is someone that ‘looks’ like them or that they can aspire to be.

If you can’t see it, you can’t be it!

However, what happens when you can’t find female role models in your organisation especially role models of the minority groups? This indicates there’s a lack of normalisation for senior female leaders. What does it look like to lead in this organisation if you are female??? When there’s no one to role model behaviours, we end up thinking that we need to replicate more male behaviours. This in turn then feels inauthentic for many women and drains their energy, which can lead to a lack of confidence and imposter syndrome and they leave – and so the balance never improves.

That’s why having equal access to the right advice, such as a mentorship program available to all female employees, or reverse mentoring to all males, can help women grow in an inclusive environment. Such programs can also empower women to become mentors and encourage aspiring female leaders to work on their career progression.

Women are essential to the success of any business. We’ve repeatedly seen how organisations perform much better when they leverage diversity at all levels.

What are the common challenges that women face and need help with?

Having coached hundreds of women and supported various organisations around the world, many of my clients often start the conversation with “I’m unhappy”, “I’m exhausted/ burnt out” or “I’ve lost my direction”. They think they are isolated in their thoughts and challenges and need to be “fixed”. But none of that is true. We just need to have the right support system that can empower us define our own success, be who we want to be and do it with confidence.

That’s why I embrace all my clients’ thoughts as I support them throughout my coaching sessions. Fundamentally, we have the answers within ourselves. It’s my role to offer an inclusive space for my clients to be intentional about exploring and identifying their values and strengths, how they define success, and what is blocking them from achieving their goals.

Supporting my clients focus on what to say “yes” to and when to say “no”, allows them to develop their authentic leadership capabilities and stand in their story, their strengths, their development areas and aspirations with confidence and pride.

Confronting these challenges takes time and dedication. There’s also an important role that the right psychometric analysis plays in understanding themselves. But embarking on this discovery journey together with my clients can help them break down the isolation barrier as they understand how they can lead their life in an authentic way.

What’s your advice for senior leaders who want to build more sustainable and inclusive leadership positions?

Women are essential to the success of any business. We’ve repeatedly seen how organisations perform much better when they leverage diversity at all levels. In fact, a McKinsey study, published in 2018, shows that “Companies in the top quartile for gender diversity were 21% more likely to outperform on profitability and 27% more likely to outperform on value creation compared to industry peers”.

But we’re still stuck on only nurturing female leaders. This is only one side of the imbalance. In actuality, it’s mission-critical for an organisation to nurture, build and develop the right environment for women to feel supported to grow and thrive alongside the development of nurturing female leaders. It’s a dual track that lets organisations truly access the full potential of aspiring and experienced female leaders.

So, who is responsible to drive this change? Everyone! This isn’t the responsibility of just one department or role. We all have a responsibility to make informed business decisions. We need to take accountability and action towards a more inclusive world.

Additionally, language plays a critical role in establishing an inclusive work culture because it’s an essential part of how we communicate with each other. If we talk about female leadership as an onerous task to achieve certain targets or a box-ticking exercise, then the actions and treatment of female leaders will follow that narrative. Our language needs to change to how invaluable the inclusion of female leaders is and celebrate their success equally.

As female employees are more likely to experience belittling and microaggression, such as having their judgment questioned or being mistaken for someone more junior, all leaders need to keep their communication channels open throughout the organisation, they need to stay curious, ask questions and listen to the responses. This way, the organisation can start to build psychological safety to enable the honest feedback to be presented – this enables change.

One way that can help facilitate these conversations is through external involvement like our reverse mentoring program. Reverse mentoring is a proven way that connects female employees with senior leaders on a 1-2-1 basis to discuss openly their challenges and share their perspectives and experiences at the organisation. These conversations are conducted in a safe and inclusive environment so that all participants can work towards building long-term trust and connection.

We also structure the program specifically to help male colleagues understand the statistics and research and allow them to become allies for gender equality. This includes bringing in data and case studies for them to assess their communication preferences and raise awareness of harmful unconscious bias towards women at work. We build allies.

Senior leaders that have joined our programs consistently report an improved understanding of what’s actually happening at their organisation. They also gained more enlightening perspectives that change their assumptions about their work culture. These experiences cannot be gained simply from their standpoint.

But more importantly, young women are even more ambitious and place more significance on working for fair, supportive and inclusive organisations. They’re watching senior women leave for better opportunities and are prepared to do the same. If companies don’t act now, they can risk losing, not only their current female leaders but also the next generation of talent.

What is your favourite thing about your job?

Now that I am living with purpose, it doesn’t feel like a job. Travelling around the world with my “job”, I value the extensive insight I’m gaining from encountering various corporate cultures and their leadership journeys. I get to explore different organisational cultures and acquire broad insights into many businesses and see how they’re working towards inclusive leadership. I’ve also had the chance to identify local themes in a global context, meet incredible people and watch them become themselves in an authentic way.

What I do also brings all sorts of challenges. It’s fascinating to see who’s talking a good game but they are only paying lip service. Coming in as a trusted advisor, I can then challenge their system and bring in new views with positivity.

But what really drives my passion for what I do is that I can stimulate real positive change every day. I cherish all the responses I get from participants after attending my programmes for the impact I’ve made on them and their businesses.

Each person I coach and each leader that has participated in my programs have made a conscious effort to shift how they view themselves and the inequality around them. These people are like pebbles in a pool, taking their learnings, reflections and confidence and rippling an unstoppable effect towards openness, honesty and deep curiosity to do better, to be better.

I see this effect as we shift towards a brave new world where people can find their own success by their very own measures and live to their highest potential. This world will see leaders drawing flexible boundaries and shaping structures to secure inclusive environments for growth and creativity for all genders.

 

Consequently, the current macroeconomic backdrop is not a recipe for decent investment returns in stocks, bond, and cash. This represents a significant challenge for investors and savers alike, who are already under increased pressure due to decisions made by successive governments, which have introduced a series of restrictions on pensions. Further compounding the issue, the financial strain caused by rising inflation and the cost-of-living crisis are causing significant stress for investors. 

Providing essential tax relief

This year, tax and pension planning will undoubtedly be two key issues influencing investors. Even before the Chancellor’s Autumn statement, which raised the UK’s tax burden to its highest level since Clement Attlee’s post-war government, a series of restrictions on pensions has forced many savers to look for alternative tax-efficient options for their capital.[1]

Indeed, the government's decision in the Spring of last year to reduce the lifetime allowance on savers’ pensions and lock it at this level until 2026 will see any remaining excess in pensions pots subject to a 55 per cent tax penalty.

Venture Capital Trusts (VCTs), such as Triple Point’s Venture Fund VCT, can provide investors with a crucial investment and supplementary pension tool. This comes at a time when the government is raising record revenues from taxpayers, thus making it critical that investors put their money to work effectively.

The tax-free dividends offered by VCTs, alongside no capital gains tax (CGT) on gains, make them an attractive alternative source of tax-free income, which can complement a traditional pension portfolio.

Furthermore, over the last ten years, the average net asset value total return for both AIM VCTs and generalist VCTs has been 101%, making VCTs not only a tax-efficient vehicle but also a competitive investment product in its own right.[2]

Thinking beyond 2023 

However, it is not enough to merely focus on the tax situation this year. Many investors will find their tax-free allowances and thresholds squeezed by 2024 if they don’t act now.

With the tax-free dividend allowance being reduced to £1,000 in 2023 and £500 from April 2024, VCTs remain one of the most tax-efficient investments by allowing investors to claim upfront tax relief worth 30% of the amount invested, up to an investment of £200,000.

For business owners who have traditionally reduced their income tax liability by investing large sums into their pension or paying themselves dividends, these changes can have a devastating impact on their financial and pension planning if they are not addressed.

By investing in a VCT, business owners and other investors who have used dividends as a vital source of income can significantly reduce their financial exposure to the costly shifts in the UK’s tax and pension planning regulations, which look likely to occur over the next decade.

Selecting the right strategy 

To truly capitalise on the benefits of VCT investment, investors and savers should look to invest in VCTs that they think have the best strategy. With over 20% of start-ups failing within the first five years, implementing the right investment plan can help mitigate the risks that come with investing in early-stage companies.[3]

A successful VCT strategy should follow a key investment criterion ensuring that each early-stage company has an appetite for growth and a path for long-term profitability. This involves working alongside VCTs to solve real-world corporate challenges. For example, Strategic VCT investments enable innovation in young companies, helping create local and highly skilled jobs while allowing the investor to back high-quality and better-capitalised companies with lower valuations.

Triple Points Venture Fund VCT, for example, adopts a challenge-led approach to investment which primarily focuses on pre-series A B2B technology businesses. With high-growth B2B technology businesses accounting for 77% of all exits in 2019, this sector tends to offer better valuation on entry and better returns.[4]

Supporting dynamic and innovative companies 

Whilst tax relief is one of the primary appeals of a VCT investment, it is difficult to ignore the role in which they play within the wider UK economy. VCT fundraising in 2022 surpassed the £1 billion milestone for the first time, raising £1.13 billion to be invested in small and innovative UK companies.[5]

Despite the daunting in-tray which investors face, the benefits of VCT investment have never been greater. It offers an opportunity to both support and capitalise on a wave of British entrepreneurialism emerging from this recessionary period. For business owners, VCT investment allows them to efficiently extract profits from the business at a time when the UK government is slashing the dividend tax allowance.

If investors don’t act now and plan ahead by incorporating VCTs into their investment portfolio, they risk being exposed to increasing macroeconomic pressures and foreseeable changes to the UK’s pension and tax systems.



[1] https://www.independent.co.uk/money/uk-s-tax-burden-what-do-the-figures-show-b2097564.html

[2] https://www.theaic.co.uk/aic/find-compare-investment-companies/advanced-compare

[3] https://www.investopedia.com/articles/personal-finance/040915/how-many-startups-fail-and-why.asp

[4] https://www.triplepoint.co.uk/filedownload.php?a=750-5f802c8866add

[5] https://www.theaic.co.uk/aic/news/press-releases/smes-to-benefit-from-record-funding-as-vcts-raise-over-a-billion-in-202122

However, despite the great leaps forward, a significant disparity exists between the number of men and women welcomed into the industry. As a young woman who had left school after A levels, it was challenging to progress in a very ‘traditional banking’ environment. I was fortunate to be accepted onto an accelerated management development programme in the first couple of years, but then it was down to me, and it took a lot of hard work to get to where I am today. It is incredibly important to talk about the challenges that continue to face women so that we can push forward equality and representation, create even more opportunities for talented women across all levels, and ultimately serve our customers better.

Currently, the top five gender pay gaps by sector are all within financial services, with the average pay gap within the industry being 26.6%. That’s well above the 12.1% documented across the broader UK market[1]. This needs to be prioritised by decision-makers to balance the opportunities and provide space for new talent and perspectives to enter the market – something greatly needed during real financial uncertainty.

I recently read Christine Lagarde’s experience of being surrounded by men throughout her career, including in her current role as the head of the European Central Bank. While I can relate to how she feels, I am grateful to have had Ana Botin as a role model for me during my time at Santander. She was admired by many at the organisation, and I learned many positive lessons from my time there.

Unfortunately, my experience of having strong women in senior positions is still rare. In 2021, the proportion of women in leadership roles within financial services organisations was 24% with the projection that this would grow to 28% by 2030[2]. This shouldn’t be acceptable and shows we must do more to ensure we move from conversations about increasing equality to material action.

The UK Government has recognised change is needed and has been running the HM Treasury Women in Finance Charter since March 2016 to improve gender balance in senior management. The charter now has over 400 signatories with 950,000 employees across the sector. 97% of these signatories have also said their agenda to improve representation has improved since the inception of the charter.

Unfortunately, my experience of having strong women in senior positions is still rare. In 2021, the proportion of women in leadership roles within financial services organisations was 24% with the projection that this would grow to 28% by 2030.

In their five-year report, the charter documented that there has been a rise from 14% to 22% on average for women in executive committees since 2016. And women board members have also risen from 23% to 31%[3]. While there is still work to do, these are encouraging figures and show what can be done when government and industry take action. We must continue to track data, hire, promote and train women to drive future improvements and provide positive environments that allow both women and men to thrive in their careers.

FinTech is a disruptive force across the financial services and banking industry as it continues to challenge the status quo by incorporating new problem-solving technology, ultimately making life easier for those interacting with it. Often, as is the case with challenger banks, disruption takes the form of going against the traditional banking model and paving the way for adaptation. I’ve found this refreshing since joining Kroo because building a bank from scratch allows you to start with a blank canvas and strips back the traditional processes and bureaucracy associated with legacy banking.

Due to its disruptive nature, the FinTech industry has an opportunity to lead the way in providing opportunities to women and other minority groups ignored by the sector. It is well-positioned to bring equality to the financial services sector by providing opportunities to develop a stronger team that better represents and serves its customer base.

However, old banking values are infiltrating this new and exciting space as only 1.5% of global FinTech firms are founded solely by women and receive just 1% of total FinTech funding. As well as this, just 5.6% of global FinTech CEOs are women, and less than 4% hold the title[4].

Overcoming barriers and producing real change

Highlighting and raising awareness of the stigma that persists against women in financial services and leaders in other corporate environments plays a crucial role in driving change. All organisations should keep this in mind if they want to help address the gender inequality problem moving forward.

At Kroo, I am proud to say that we are very focused on creating initiatives to help more women progress into leadership roles. I mentor several women on our team, having known the benefits of this for my career progression. We are also partnering with organisations to help drive progression for women in technology and product roles. We are very focused on initiatives such as the gender pay gap, which for neo-banks is better than some of the more traditional organisations but still has improvements to make.

We all know that change will not happen overnight, and it will take time and effort to address the inequality throughout the financial services sector. Still, the current wave of challenger banks and a generation that wants to do banking differently has a golden opportunity to produce change. Within my role at Kroo, I am committed to championing diversity and ensuring equal opportunities within my team and for women within the sector. Equal representation of women within the financial services sector might still not be a reality, but together we can make it happen.

[1] PwC, Gender Pay Gap reporting in the Financial Services sector in 2020/2021

[2] Deloitte, Leadership, Representation and Gender Equity in Financial Services

[3] HM Treasury Women in Finance Charter: Five Year Review

[4] Findexable, Fintech Diversity Radar

 

Not only have the number of crimes increased, but the impact of these breaches has also become more severe. Criminals are gaining access to huge amounts of personal data from enterprises, including bank details and ID documents, as seen in the recent attack on Arnold Clark. Companies integral to the UK’s national infrastructure are also being crippled by cyber attacks, such as Royal Mail, which has seen severe disruption to its overseas delivery capabilities following a breach.

Owing to the higher severity of breaches, the average cost of a single attack in the UK has reached a seven-year high at £4.56 million which has, in turn, had a major impact on both the rates and the requirements for cyber insurance. As the frequency and value of payouts has gone up, so has the price of cyber insurance – rising by 66% in the third quarter of 2022, following a peak increase of 102% in the first quarter.

And, while policies will of course differ between insurers, there is an ever-growing checklist of requirements that organisations need to adhere to in order to be accepted. It is no longer an expectation that companies show they’ve taken appropriate action to protect themselves against cyber crime, it is a requirement. And those that can’t prove they have provided sufficient technical solutions and training to secure their network will be denied insurance or refused payment when making a claim.

This comes alongside an increased number of exemptions from Insurers as to what they will, and will not, cover. One of those most notable of these recently was Lloyd’s of London’s decision to no longer protect against ‘state-sponsored attacks’, meaning that any attacks an Insurance company could claim were linked to a nation-state would no longer be covered.

For businesses, this has led to a few questions. Firstly, what are the requirements to qualify for cyber insurance and what will be covered? And secondly, given the robust level of security your organisation will achieve through ticking off the checklist of requirements – is the cost of insurance actually worth it?

Am I eligible for cyber insurance?

Across the board, insurance is becoming increasingly challenging to get hold of. Not only are costs soaring, but underwriting requirements are higher and greater scrutiny is being placed on risk mitigation and security program maturity.

Therefore, for businesses to be eligible for cyber insurance, they need to show that they already have robust security in place. While the specific requirements for cyber insurance will vary – based on the industry, insurer, the size of the business and the type of coverage required – there are some universal security measures that every business looking for insurance needs to have in place:

Having these measures in place can help towards eligibility for cyber insurance, however, actual requirements will vary on a case-by-case basis. Additionally, while implementing the above can help organisations to secure insurance and start better protecting themselves, certain industries will have their own regulations that need to be met – such as the Telecommunications (Security) Act (TSA)  for Network Operators – and it is unlikely that Insurance companies will accept those that don’t comply with Government legislations.

Is cyber insurance worth it? 

Ultimately, there is no ‘yes or no’ answer to whether cyber insurance is worth the cost. It comes down to the details of the individual policy and will require an in-depth investigation into exactly what will be covered, any stipulations and limits included in the contract, and the price of the premium.

One of the many elements that should be considered is that in the event of a breach, some Insurers will insist on choosing the company that investigates the attack themselves. And while that may not seem like a big deal initially, it becomes more of an issue when combined with the recent exemptions around state-sponsored attacks, giving the Insurance company the power to determine if there is a link to a nation-state or not – and ultimately if that affects the eligibility of the claim.

Organisations, therefore, need to ask themselves whether they are comfortable with this and whether they are happy to trust the results of the Insurer’s investigation, particularly if they have their own means to investigate a breach – be it their own technology, or an existing relationship with an attack remediation company – as an insurance company may reject findings that differ from its own.

This may draw the level of worth provided by cyber insurance further into question. What is, however, without a doubt ‘worth it’ is ensuring your cyber security continues to be at a level where its eligibility for insurance couldn’t be brought into question.

As the threat landscape continues to grow, businesses need to remain aware of the evolving threats, and increase their security measures alongside them, so they can continue to protect themselves, their business partners and their customers from attack. And while cyber insurance requirements themselves shouldn’t be used as a base level for an organisation’s security, the higher bar being set does indicate the need to reassess levels of protection.

Furthermore, as additional security compliances are imposed on some sectors, such as the aforementioned TSA and the EU’s DORA (as well as a likely UK equivalent) for Financial Services, reviewing and upgrading security measures isn’t just important for protecting your business – it is becoming a more important part of the criteria for companies assessing their 3rd party suppliers.

The bottom line

Ultimately, the choice to take out cyber insurance will come down to the cost of the policy, the level of cover you’re able to receive and any stipulations or exemptions. Nevertheless, whether you are insured or not, paying attention to the requirements for cyber security – both from insurance companies and Government regulations – is of utmost importance.

Adhering to security guidelines, such as cyber essentials and cyber essentials plus, can help to strengthen your security environment, while regular testing of cyber defences can determine any areas of your security that need to be upgraded. This will not only help your organisation qualify for cyber insurance should you want it, as well as likely reduce your premium, but it will also majorly reduce the chance of a successful breach.

Insurance or no insurance, the threat landscape is evolving, and your security measures need to evolve with it.

In 2019, the UK Government set a goal of Net Zero by 2050 with an additional pledge to reduce emissions by 68% compared to 1990 levels, by 2030.

However, The British Standards Institution’s Net Zero Barometer report, surveying 1,000 senior decision-makers and sustainability professionals in the UK, found that financial services are falling behind: while 61% of the IT sector have set sustainability goals, financial services sits at 42%. Banks need to understand and address this lag and fast - needing access to the right data to understand the problem and address it in multiple ways.

Pressure on Financial Services

Unsurprisingly, the financial sector has come under a lot of scrutiny from regulators and the public alike, for a perceived lack of action and its role in supporting unsustainable practices. The issues have been kept in the spotlight not just by vigilante groups like Just Stop Oil, but also by recent examples like an active shareholder revolt at HSBC, pushing them to divest from energy companies.

But it is not just activists and regulatory groups. There is significant proof in the data that consumers are seeking alternatives to the traditional banking orthodoxy. Customers of retail banks have shown strong demand for green finance products, with 45% seeking sustainable credit & debit cards, and 31% seeking green loans and mortgages.

The focus on environmental, sustainability and governance (ESG) within investing has also ramped up year after year. We’re starting to see a new phase that we call ‘banking on purpose’, connecting boards and consumers in visions for a greener future, whilst increasing prosperity for the communities they support.

ESG considerations are set to loom large over companies — this will be important to maintaining reputations at a consumer, shareholder and board level.

Integrate Green into the Offering

Promisingly, data reveals that 83% of new build houses in the UK are eligible for a green mortgage. However, £2.9 trillion of UK housing stock is currently ineligible, providing a significant opportunity for banks to serve these homeowners. Offering loans to support renovations that seek to improve the energy efficiency rating of properties can help FS institutions embed consumer-focused initiatives into their offerings, rather than having them as an afterthought.

Retail banks have started to promote sustainability and are affecting change — for example, Lloyds Banking Group’s ‘Helping Britain Prosper’ strategy directly tackles the challenges of ESG for all stakeholders, securing more sustainable returns and capital generation by honing in on housing access, inclusion, and regional development, while aiming to reduce its own carbon emissions by over 50% by 2030. Its efforts are aligning with a sustainable financing portfolio, pledging over £52 billion in investment by 2024 as part of their ESG strategy.

Change is equally underway at the consumer level with NatWest introducing its own carbon tracker feature that analyses consumer transactions and applies it to a regulated emissions calculator, calculating the carbon footprint throughout the complete process. By introducing this feature as well as suggesting ways customers can reduce their own personal impact, they hope to save 1 billion kilograms of CO2e emissions per year, the equivalent of planting 1 million trees.

To ensure banks can become sustainable whilst remaining competitive, accurate measurement of emissions is critical and must include scopes 1, 2 and 3 emissions. This is not a simple task and requires a digitally enabled, agile and modern core at the centre of the business.  If Financial Services firms want to drive meaningful impact, they will need to move from treating sustainability from the periphery to the core of their business priorities.

By putting environmentally friendly initiatives at the heart of their business strategies, the banking industry can fulfil the needs of their customers and ensure we all play our part in building a more sustainable future. This is certainly a positive start to the UK’s mission of reducing its greenhouse gas emissions by 2050, we still expect to see this industry ramp up its efforts as we get closer and closer to the point of no return.

Fraud is always at its most virulent during economic downturns and crises. In fact, in the first nine months of 2022, over 309,000 cases were recorded to the National Fraud Database, a 17% rise compared to the previous year. This increase was mainly driven by the rise in false application and identity fraud, up by 45% and 34%, respectively.

It’s perhaps no surprise that fraudsters will see new AI-powered technologies, such as ChatGPT, as a golden ticket to exploit vulnerable people. Others may turn to opportunistic fraud if the resources are available to them, highlighting the need for organisations to be investing in both predictive and preventative technology if they are to protect consumers.

How fraudsters are using AI

In the first half of 2022 alone, UK Finance revealed that criminals stole a total of £609.8 million through authorised and unauthorised fraud and scams. The same report shows that these figures were even higher during the pandemic. It’s therefore no surprise that the financial services industry is constantly looking for ways to strengthen security protocols and protect consumers, with tools such as two-factor identification and biometric authentication becoming the norm.

However, professional fraudsters are also seeking to find new ways to exploit consumers - something the finance industry needs to respond to quickly. Just recently, an investigation by Which? revealed that criminals are increasingly intercepting one-time-passcodes delivered via sms - putting customers at risk. They identified further weaknesses as insecure passwords, lax checks on new payees and vulnerable log-in processes.

While fraudsters recognise that they are unable to readily fake an account holder’s fingerprints or face, they are now turning to AI-enabled social engineering tools to generate a brand new or synthetic identity, creating fake bank accounts and then committing fraud.

The aforementioned ChatGPT has taken the internet by storm, with the AI-powered chatbot able to interact with users in a conversational way within a matter of seconds. Experts working in the finance industry have noted that the tool could be used for enhancing banks’ customer service or marketing efforts. Yet experts have also highlighted how ChatGPT can be a gateway to fraud. The chatbot can enable scammers from all over the world to craft emails that are so convincing they can get cash from victims without relying on malware or other unscrupulous techniques.

Unsurprisingly, speculation is rising around what else the tool could enable - especially when developments are moving faster than regulation. The next question for the finance industry is how to proactively get ahead of the game and prevent fraud before it occurs. The answer lies in the same technology - AI.

AI to the rescue

It’s important for organisations to join up their defences. Having a robust, enterprise fraud framework in place will enable fraud to be identified and prevented across all channels. For example, through the deployment of AI, banks can analyse customer-related and behavioural-based data, set up alerts and automate case management. This will help to create a holistic overview of fraud risk, as well as enhance accuracy.

For years, banks tended to rely on rules-based technology to spot fraud risk. However, as fraudsters have got smarter these rules need to be continuously updated and tuned if they are to be effective. AI comes to the rescue here. The implementation of a model development framework will allow a business to import and execute rules via a real-time decision engine.

Through the use of Machine Learning (ML), organisations can also be automatically alerted to any concerning changes in a person’s transaction history or behaviour - catching criminals in the act when masquerading as a customer.

We are already seeing some organisations introduce adaptive machine learning techniques - which build on traditional ML to process large amounts of real-time, rapidly changing data - an approach which certainly needs to become more mainstream across the sector in order to catch fraud before it’s too late.

AI-powered technology can also detect cases of false or synthetic identity in real-time, to ensure fraudulent activity is immediately stopped. For example, should a fraudster apply for a loan or credit, or seek to withdraw funds, using a fake identity this will be flagged and investigated.

Similarly, AI allows organisations to stay one step ahead of fraudsters, producing a comprehensive fraud risk assessment - a targeted fraud landscape review with a focus on identifying current sources of fraud losses, process leaks and other pains.

At SAS, we always test our AI models against challenger models and then optimise them as new data becomes available. When new scams arise, our systems immediately know.

Customers are often left with limited options after falling victim to fraud, particularly if it occurs through a customer authorising a transaction themselves. More regulation could help here, but educating the public is of equal importance. With tools such as ChatGPT on hand, typos in emails are no longer the first indicator of a scam. The industry should look to invest significantly in both fraud detection and prevention technology if they are to avert a rise in fraud.

Continued threat of evolving fraud types

According to a recent report by Cifas, the UK could be heading into 2023 with unprecedented levels of fraud spurred on by the cost of living crisis. The figures reveal that more people have reported being a victim of identity fraud, which has increased by nearly a quarter (23%) compared to pre-pandemic levels.

With no sign of abating, solutions that provide robust identity verification measures must be implemented to combat this type of fraud. By utilising technologies such as biometrics and artificial intelligence (AI), organisations can enhance the security of their systems, all the while improving the customer experience. Biometrics, such as facial recognition and fingerprint scanning, can quickly and accurately verify a customer's identity, reducing the risk of fraud. AI-powered fraud detection systems can in turn analyse large amounts of data and identify unusual patterns, helping to prevent fraud before it occurs.

Our research shows that over half of UK consumers (57%) are more likely to engage with an online financial services provider that has robust identity verification measures in place, so by embracing these solutions, financial services organisations can better combat fraud in a way customers are open to.

Digital identity payments

The shift toward a cashless society has spurred on the adoption of digital payment methods. Debit and credit cards are declining in popularity as consumers opt for the convenience and security offered by mobile wallets and payment apps such as Apple Pay. Biometric authentication of digital identities is a driving force behind this trend; e-wallets and digital banking apps tend to provide a more secure and convenient way to store and authenticate financial information and complete transactions without the need for physical cards or cash. In fact, in 2023, it is expected that the number of transactions made through digital identities will surpass those made through traditional credit and debit cards.

As consumers grow more comfortable with the use of digital identities, financial services organisations should leverage this level of acceptance – and even preference – by looking at ways to implement this technology. We know that the use of digital identities already provides a higher level of fraud prevention, but it could also improve customer acquisition and drive business growth.

Impact of EU AI Act on financial sector firms

The European Union AI Act is a proposed legislation aimed at regulating the use of artificial intelligence in the EU. The draft legislation outlines a risk-based classification of AI systems and provides a certification framework. The Act has been agreed upon by the European Council and is set to be voted on by the European Parliament in April 2023. If passed, financial services firms will likely have to ensure their AI systems meet the necessary standards of safety, transparency and ethical considerations outlined.

It may impact areas in which financial organisations employ the use of AI, such as credit scoring, insurance underwriting and fraud detection, meaning they will potentially have to conduct safety assessments and implement transparent decision-making processes for the AI systems being used. Considering the ethical implications, such as the potential for perpetuating biases or discrimination, would become a requirement.

Firms should take a proactive approach to ensure compliance with the proposed EU AI Act as it represents a significant development in AI regulation that could have far-reaching implications for many industries, financial services no exception. By taking steps to understand the requirements of the EU AI Act now and planning how to address them, organisations can set themselves up for success in an increasingly regulated landscape.

As new challenges present themselves, so too do new solutions. Technology is at the core of this and it’s important for financial services firms to stay ahead of the curve and embrace new solutions to meet the changing landscape. The future is full of possibility, and we can expect to see continued growth and innovation in 2023 to realise the potential that lies ahead.

 

Robert Prigge is responsible for all aspects of Jumio’s business and strategy. Specializing in security and enterprise business, he held C-level or senior management positions at Infrascale, Secure Computing, McAfee, Quest Software, Sterling Commerce, and IBM.

Landwood Group is a team of chartered surveyors, asset managers and auctioneers who provide an unrivalled service on all aspects of property, plant and machinery and business assets. Professional, experienced, friendly, focused and down to earth, the Landwood Group team cares about doing the best job they can for their clients. The service every client gets is director-led, personal and tailored to them.

We caught up with Mark to hear his insights on the current economic climate and how it affects businesses in the UK.

Given the toxic operating climate that many UK businesses are currently facing - with some reports stating that 600,000 UK businesses are experiencing severe financial distress -, what advice would you give to company directors who are considering taking their business into liquidation?

It is absolutely crucial to seek professional advice urgently. We know that the earlier you speak to expert insolvency professionals who can assist, the more options there are likely to be for saving the business or finding positive outcomes. This can often be the difference between restructuring the business or going into administration or liquidation. Insolvency professionals will be able to help the business navigate their way through the difficulties and if liquidation is the best option, they can manage the process for the business to achieve the best possible outcome.

What factors do you feel are currently driving the current wave of insolvencies, both voluntary and compulsory, and what headwinds should company directors be aware of in 2023?

There are currently a host of factors affecting businesses in the UK, including rapidly increasing costs of materials, unprecedented energy price inflation, interest rates returning to the long run average and of course changing consumer behaviour. We are also still seeing the impact of the shift to employees working from home and the effect this has on transport use and the city centre retail and restaurant/leisure sector.

With so many companies under pressure, how does your firm typically assist in the restructuring and recovery of a company?

Landwood Group provides business asset and property valuation plus appraisal advice to insolvency professionals and the businesses they advise. Valuations can also be used by businesses to help refinance and obtain a much-needed cash flow boost. The Landwood Group team also assists businesses with the sale of surplus assets and property to generate capital for reinvestment in the business or to help right-size its operations.

In the current climate, is securing more credit to aid recovery a viable option and what ‘tests’ would you typically undertake to determine if more funding is the right way forward?

Businesses often secure additional funding to assist with navigating a difficult period, buying them time to restructure and get onto an even keel. And while this is outside the Landwood Group offering and strict area of expertise in the right circumstances securing funding can provide the temporary lifeline a business needs to survive for the long term.

What are the challenges you face when attempting to appraise and value the assets of businesses that have gone into liquidation? What challenges present themselves when a company has overseas or offshore assets?

Appraising and valuing distressed business assets, whether in liquidation, administration or receivership can be challenging. Gaining access to the site can be problematic and depends on the directors and or the landlord cooperating. Access to MI systems and documentary evidence for the assets, stock and property is very important when gathering data for valuations, but this can also be hard to obtain if the owners and directors of the business don’t cooperate or have already walked away.

Valuing the goodwill, intellectual property and other intangible assets requires detailed information to support them. Again these can also be challenging to obtain in a distressed situation.

In essence, it is not unusual to have little - if any - information and help, meaning that we have to reconstruct and retrofit as much information as possible. This can have an adverse impact on valuations, for all the obvious reasons.

Asset and stock values will need to be on an ex-situ (or break up) basis, which is typically a heavily discounted value that reflects the potential sale realisations of the assets on the second-hand market. This can be most extreme when selling distressed stock which can often be valued as low as 10p in the £1. This reflects the often significant cost of removal, storage and sale of the stock.

Finally, overseas or offshore assets are not as common an issue, but where they exist they will be subject to the local jurisdiction and laws governing insolvency. The remote (from the UK) location of these assets also presents a challenge for physical inspection of the site and assets.

You are a full-service firm, which includes selling assets and property portfolios. What impact is the current economic environment having on the sale and disposal of assets?

The market for distressed assets usually remains resilient with experienced buyers ready and willing to act at short notice. Buyers of machinery and business assets tend to be savvy and well aware of the opportunities to be had in this environment. Both trader and end-user buyers are still prepared to buy if the deals are good enough.

However, traditional buyers of residential properties (owner-occupiers) are more cautious and lenders even more so, restricting their lending criteria even if they maintain their headline rates and messaging about the availability of mortgages. Cash is king in these circumstances.

Commercial property sale volumes have already slowed down and values have dropped across the UK. However, deals continue to happen albeit the practice of “price chipping” has returned with buyers seeking to take advantage of the position in the market.

Phone: 0161 710 2010

Email: mark.bailey@landwoodgroup.com

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