Finance Monthly March 2019 Edition

41 www.finance-monthly.com ASK THE EXPERT - LENDING “A new generation of innovative, affordable, forward-thinking lenders, able to move quickly without legacy systems holding them back, is entering the market to meet this need, breaking down financial exclusion” – Banking Circle is providing PSPs with the tools to offer their customers a unique solution to the age- old business problem, that of managing cash flow. With Banking Circle Instant Settlement, a lending decision is made instantly, online, enabling the merchant to receive payment immediately. With cash kept flowing, the business can pay its costs, reinvest in the business, expand to new markets and geographies, and compete effectively, ensuring they can reach their global potential without being held back by slow cash flow. Whether a company needs to pay suppliers, refurbish premises, invest in marketing or increase headcount, a quick and simple advance on payments due could make the difference. And Banking Circle Instant Settlement can provide the essential stepping stone to get the business through without the long-term repayment commitment of a business loan. Banking Circle Instant Settlement, which can be accessed via a PSP or other FinTech gives merchants the facility of instant settlement of receivables due, without waiting for settlement cycles or invoice due dates. The advance is paid back in full once the invoice is settled or the payment processed. The seller receives their funds instantly and payment is settled by the customer or marketplace at a later date. received – and the ever-present spectre of late payment can stretch that gap out even further. The seller has incurred the costs of the order – production, shipping and essential business costs such as rent and salaries – but the wait for incoming payment can be almost interminable. For small businesses, with less flexible cash flow, this could be the difference between success and failure. But what’s the answer? Banks have traditionally been the only viable solution for a business loan, so they are often still the SME’s go-to provider for even short-term financial help. However, slow set-up, relatively high-interest rates and expensive arrangement fees can add to the cost of borrowing and put-off many would-be borrowers. Specialist lenders can often provide a more cost-effective, and faster business loan solution. However, many apply very high-interest rates which can make repayments a significant burden for a smaller business. Existing solutions, even those which are newer to the market, cannot provide the scale the global digital business landscape requires, at least not in an affordable or flexible form which will allow businesses of all sizes to grow, succeed and compete effectively. A new generation of innovative, affordable, forward-thinking lenders, able to move quickly without legacy systems holding them back, is entering the market to meet this need, breaking down financial exclusion. And it seems the marketplace is open to these new offerings, whether cash advances on receivables due, or longer-term business loans. Changing the business lending landscape 58% of respondents to our research said they would approach a non-bank for a loan, if it offered low-interest rates, and 44% would do so to achieve lower arrangement fees. New solutions are designed with the customers’ needs at the centre, rather than the incumbent’s abilities and what fits within their traditional infrastructure. A stitch in time Financial utilities are able to support Financial Tech businesses and banks in providing their customers with the convenient, flexible and lower cost solutions businesses need in today’s market. The systems and infrastructure have opened allowing non-banks to provide innovative solutions to better serve end users. And financial utilities like Banking Circle can offer business loan solutions that help rather than hinder business success. As a next-generation provider of mission-critical banking infrastructure – from payments to lending www.bankingcircle.com The full results of the Banking Circle SME study are included in the white paper, ‘The epic business loan battle: SMEs fighting for finance’, which can be downloaded at bankingcircle.com 1 https://www.gov.uk/government/statistics/business-population-estimates-2017 2 https://www2.deloitte.com/uk/en/pages/financial-services/articles/changing-world-of-sme-lending.html# Anders la Cour