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Outsourcing Finance Services: Everything You Need to Know 

The popularity of financial outsourcing is growing every day, as it enables medium-sized businesses and large companies to improve their financial functions cost-effectively. In this article, we will cover the following points:

  1. What is Outsourcing & Accounting Outsourcing?
  2. Risks Related to Outsourcing Finance Operations
  3. Reasons Why Organisations Should Outsource Finance and Accounting
  4. Outsourcing Finance: Find a Reliable Vendor 

What is Outsourcing & Accounting Outsourcing?

First, you need to know that outsourcing is a company's refusal to independently perform a number of non-critical business functions or parts of business processes and transfer them to a third-party contractor who professionally specialises in the provision of such finance and accounting services.

Consequently, financial outsourcing is the transfer of the functions of accounting and tax accounting and reporting to specialised organisations.

Company's Operations to Outsource

Of course, financial and accounting outsourcing is not all. Companies can outsource the following functions:

For example, if you are looking for software development outsourcing, it would be a good idea to look into the web development services of a company that develops custom software from a distance.

Finance Services for Outsourcing

If you want to outsource crypto or financial tasks, this does not mean at all that you need to give the intermediary all the available financial information.

Outsourcing can be used for the following assignments:

  1. Bookkeeping and Back-Office Support 
  2. Controller Services
  3. Financial Planning and Analysis (FP&A) 

3 Types of Outsourcing

Now you already roughly understand what functions in the company you can outsource. Now is the time to choose the type of outsourcing.

There are three different types of outsourcing:

  1. Local Outsourcing
  2. Nearshore Outsourcing
  3. Offshore Outsourcing

So you will need to deal with each type separately and decide which one suits best.

Risks Related to Outsourcing Finance Operations

Any modern innovation, like accounting outsourcing or day trading crypto, has its own risks. They should not scare and stop you, you just need to take them into account and think over in advance what you will do in case of an unfortunate situation.

Possible Hidden Costs

Due to the fact that you, shall we say, start working with new people, there is a possibility of misunderstanding, which can lead to the fact that in one task there will be more details, the implementation of which you did not initially take into account, and this will increase your expenses.

Therefore, try to immediately discuss everything in detail and draw up a specific plan of tasks.

Less Control

When you delegate tasks to someone who is not on your team, it will be difficult for you to control the process. You will no longer be able to ask daily how the process is going.

Therefore, it is very important to initially establish a high level of trust so that you do not constantly feel that the person will do something wrong.

Distance, no Local Presence

We have already talked about this above. When you transfer some functions to outsourcers, you will be ready for the fact that you will receive answers to questions, let's say, with a delay.

To make it easier to communicate, you can set a specific schedule so that the outsourcer knows exactly when you will contact him.

Reasons Why Organisations Should Outsource Finance and Accounting

Of course, the reasons why it is very profitable for companies to outsource certain functions clearly outweigh the above risks. Let's take a closer look at all the benefits.

1. Cost-efficiency 

According to statistics, the use of outsourcing for a number of functions of company employees reduces costs by 30-45%. This is because there are employees who receive a lot, but for some reason their performance may decrease, which harms the result.

2. Focus on Strategic Tasks 

When you outsource a percentage of your work, it automatically creates more time and energy that can be spent on important tasks for the company. Everything is simple here - the less your employees are employed, the better they will perform important work.

3. Access to Specialised Talents

Outsourcing finance and accounting, since it is not tied to a specific territory, gives you access to all the people in the world who are looking for outsourcing accounting work. Thus, you have increased opportunities to find a talented and experienced person in their field.

4. Hiring Costs Elimination

When you hire a new employee, very often they need to be taught, trained, sent to some courses, and so on. With outsourcing finance, all these costs disappear, since you hire a professional in your business who just needs to be given a task.

5. Advanced Technologies and Systems

This is one of the biggest benefits, as outsourcing companies usually use cutting edge technologies that help increase work speed and avoid mistakes as much as possible.

6. Enhanced Business Operations & Accuracy

Again, outsourcing is convenient in terms of the quality of work. Your regular employees, who do the same tasks every day, do everything automatically and do not try to change or improve something. By outsourcing finance tasks, you can get not only fresh solutions, but also, possibly, change something in your company.

Outsourcing Finance: Find a Reliable Vendor 

We have already talked about what benefits a properly chosen outsourcing company can bring to you. The main thing remains - to choose this company.

Therefore, now we will talk about how to choose the right outsourcing company.

1. Search for Proven, Streamlined Processes 

Experienced outsourcers always have an established process and structure. You need to look for those who will not only promise a good result, but also clearly show how they will achieve this result.

Also, keep in mind that the team you hire must ensure risk control and data security.

2. Check Team's Experience

It is clear that you are not going to hire a person from the street, but it will not be superfluous to check the experience of the team, what projects they worked on, and ask for recommendations, and so on.

3. Evaluate Methods and Metrics for Success Measuring

Ideally, your prospective provider should have methods that will provide assessment and improvement of the company's financial condition, as well as show errors.

In Conclusion: Is Outsourcing Financial Services Right For Your Company?

Finance and accounting outsourcing services will help you not only decrease the tasks of your employees, but also reduce costs, improve results, improve some activities in the company, and so on.

The main thing remains to find an experienced provider who will meet all the necessary conditions.

A high-quality and well-thought-out process will bring great benefits to your company!

Tenable's Adam Palmer, Chief Cybersecurity Strategist, and John Salomon, FS-ISAC Director, Continental EU, Middle East, & Africa, explain the benefits of CFOs and other executives involving cybersecurity in their roles.

A commissioned study conducted by Forrester Consulting, on behalf of Tenable, found that currently only four in ten UK business leaders can confidently answer the question, “How secure are we?” There is a disconnect between business leaders, financial teams and security leaders in how they manage and communicate cyber risk. As such, cybersecurity needs to evolve as a part of the business strategy.

The Cybersecurity “Communication Gap”

Most mature businesses understand how to perform a basic assessment of the wide range of risks that impact their organisation. Cyber risk is often the exception. Cyber risk management is well established. However, business leaders, such as CFOs, don’t usually “speak” security, and techies don’t often know how to quantitatively measure, or explain, the degree of exposure to cybersecurity threats in a business context. As a result, the link between cybersecurity and the business can be lost in translation. Security is often seen solely as a cost to the business, rather than a means of preventing losses, or even a driver for increased revenue and overall success. Aligning the security programme to financial objectives improves understanding of value and drives support for corporate policies that support effective cyber risk management.

Cybersecurity Awareness – a Two-Way Street

Responsibility for ensuring effective cybersecurity risk management does not belong entirely to the CISO. Success depends on the rest of the organisation making an effort to also understand cybersecurity risk. This is not to say that a CFO must be a cybersecurity expert, as the onus is on the CISO to “speak the language of business.” Rather that financial leaders should at least have a fundamental grasp of cybersecurity. Using car ownership as an analogy, a driver does not have to know how to assemble an internal combustion engine. It is reasonable, though, to expect a competent driver to understand how to change a flat tire, check the oil level, and most crucially, when to listen to a professional mechanic.

Responsibility for ensuring effective cybersecurity risk management does not belong entirely to the CISO.

Most importantly, the infosec organisation must not be seen as a necessary evil. Rather than treating the CISO and their team as expensive alarmists, a CFO must make an effort to comprehend some of the basic concepts of cybersecurity, and the ramifications to the organisation’s finances of not having a capable, empowered security organisation. Furthermore, the cybersecurity organisation can only do its job effectively if their security risk assessment activities are backed by unambiguous, strong policies.

Seeking Clear Answers from the Security Team

The CISO must distil the highly complex topic of cybersecurity into concise, relevant messages without “dumbing it down” for business and finance leaders. While the CISO should present a measurable view of the organisation’s cyber risk exposure using internal and external comparative benchmarks, the CFO should ensure they understand the basics around:

  1. Where are we exposed?
  2. Where should we prioritise based on risk?
  3. How are we reducing our exposure over time?

Describing the target state of the security programme should be based on an understanding of risk, not blindly applying capability maturity levels. Organisations need the ability to identify and quantify their level of risk and exposure. This should be done in collaboration with the C-Suite. Cross-functional collaboration will turn the organisation’s security strategy into a “living” strategy, and ensures business alignment on priorities, costs, and needs.

Is compliance the end goal?

Many organisations will look to regulatory standards to determine their cybersecurity goals or “target state.” While there is value in meeting these baseline requirements, checking a box doesn’t necessarily equate to appropriate secure practices or addressing financial risk. Minimum, compliance-based security is not adequate security. Instead, organisations should work to really understand their critical assets, identify the vulnerabilities that affect them and create a security programme that addresses this.

By adopting a quantifiable approach to security that benchmarks internally and externally, and is aligned to business and finance objectives, it becomes much easier to define a target risk state and measure overall effectiveness. This also allows a firm to get a head start on meeting their regulatory requirements and improving communication with regulators.

CFOs need to work with CISOs in order to gain an understanding of their company’s security risk including the financial costs associated with it - both from a risk perspective, but also where technology investment might be needed. While finance can’t be expected to understand the technology or how it works, it is important to understand why it matters, including the role each new investment plays in closing the cyber exposure gap. To provide the level of detail needed to determine and reduce risks, the CISO needs to be able to determine, understand and report the following information to senior management:

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Stronger together 

Historically, cybersecurity initiatives are seldom aligned with business and finance objectives, but that must change.

Security leaders are challenged to prioritise where they focus effort — not just when it comes to vulnerabilities, but their entire cybersecurity strategy in general. By placing cyber risk management as part of an overall risk framework, business and financial executives can more easily assess whether best practices are being implemented effectively.

To do this, the CFO must work with the CISO to align cost, performance, and risk reduction objectives with business needs. This means providing a holistic understanding and assessment of the entire attack surface, with good visibility into the security of the most business-critical assets. The CFO should seek defined metrics and benchmarking processes, tied to business performance and process improvement from the CISO. Adopting this transparent, quantifiable approach will help the business understand cyber risk clearly, predict new threats, and act effectively.

The result is business-aligned security leaders that ensure their strategies are in lockstep with financial priorities. This collaboration with the CFO not only develops effective strategies and communicable metrics, but actually works to support organisational goals.

If you are a small business owner, you may know how difficult it is to get a business loan from banks and other financial institutions. The number of small business loans by traditional lenders has been on a decline since the 2008 financial crisis. This is not exciting news for small business owners who require financing to keep their small businesses moving.

However, this doesn't necessarily mean you can't acquire a business loan when you need one. You can always get a loan from a direct lender. You don't have to only rely on traditional lenders; direct lenders are a great option for short-term loans. Here are five benefits of working with direct lenders.

1. Easier loan approval

Have you ever wondered why big banks and financial institutions are not interested in giving out loans to small businesses? It's because the returns associated with small business loans are not worth the risk to them. Direct lenders don't think this way, which makes it easier for small business owners to get financial assistance from direct lenders.

2. Flexible loan terms

Unlike strict bank loan terms, direct lenders offer flexible loan terms that are favourable to small business owners. They are more accommodating when it comes to their interest rates. If you have a good credit score, you have a good chance of securing favourable terms with a direct lender. If your credit score is not good, direct lenders can still find an option on how to work with you.

3. Quick cash release

Time is of the essence for small business owners looking to keep their businesses afloat. Traditional lenders do not realise this, and most of them take a while to approve loans and release the cash. This is not the case with direct lenders, most of whom operate their businesses online. This means they approve loans and release loan cash quickly.

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4. No large down payments

Normally, banks and bigger financial institutions require a huge down payment before they agree on repayment terms. This is unfavourable to small businesses, most of which do not have the ability to make a big down payment. Generally, direct businesses don't require big down payments. However, there will be times when down payments will be unavoidable, but be sure they will be reasonable for small business owners.

5. You can acquire working capital

Working capital is the money required to fund a business's daily activities. Most banks and financial institutions are unlikely to give working capital loans to small businesses. Fortunately, you can get a working capital loan from a direct business lender.

Endnote

Many people can get a loan as long as they have the ability to repay it. However, it is a struggle for many small business owners as most banks and other traditional lenders fail to approve their applications, take forever to approve and release loan cash, and when they do, they give unfavorable loan terms. Fortunately, direct lenders approve and release loan cash quickly, and their loan repayment terms are flexible.

Nic Redfern, Finance Director at Know Your Money, offers Finance Monthly his advice for businesses ensure stable debt repayments.

It has been a hugely volatile year for UK businesses. The coronavirus pandemic has caused unprecedented economic turbulence, which continues to threaten many companies, as well as the job security of millions of employees.

Despite the Government putting in place substantial support packages to help businesses weather the storm, employers are still plagued with uncertainty. Indeed, 46% of businesses have seen demand for their services fall due to COVID-19, according to a recent survey of over 530 businesses conducted by KnowYourMoney.co.uk.

The research also showed that, with sales declining and cashflow issues rife, over a third (38%) of UK companies have taken on more debt in 2020. Of course, taking on debt can be beneficial to businesses – it can support growth or ensure survival – but failure to effectively plan for repayments can pose some serious problems in the future.

Unfortunately, planning for the future is hard at times like these. In fact, according to KnowYourMoney.co.uk’s study, over half (56%) of British businesses are struggling to make any long-term financial plans due to the uncertainty surrounding the pandemic. The fact a second lockdown has been announced since this survey was conducted will likely have made matters worse.

However, even amidst such disruption and uncertainty, there are steps that can be taken to help businesses get to grips with their debt repayments.

Take an inventory of the debt

Firstly, business leaders should make a note of all their debts. These will range from large repayments such as business loans and lines of credit, to smaller expenses, like business credit cards. This process will help employers understand which debts to confront first and where cuts can be (or need to be) made, thereby simplifying the repayment process.

Of course, taking on debt can be beneficial to businesses – it can support growth or ensure survival – but failure to effectively plan for repayments can pose some serious problems in the future.

In most cases, it is beneficial for businesses to prioritise repaying debts with the highest interest rates. This is because the longer it takes to pay off high-interest debts, the more a company will end up paying in the long term; tackling this debt early on will help to reduce long-term expenditure.

This exercise is particularly important for small and medium enterprise (SME) businesses, as they tend to face higher interest rates and shorter repayment timeframes. This is largely because UK SMEs' cash-to-debt ratio has been declining over recent years, meaning they find it harder to keep up with debt repayments. So, organising debts as early as possible will certainly help such smaller firms to avoid late payments, which could jeopardise their survival.

Choosing a debt reduction strategy 

Once the debt inventory has been completed, employers can look to develop a sustainable debt reduction strategy. The most basic form of debt reduction is the spartan approach. This involves the business limiting their spending to the bare necessities until the debt is repaid. However, this hard-line strategy might not give businesses the flexibility they require to run effectively.

Another popular option for businesses is to refinance debt. This typically means taking on a new loan in order to pay off existing debt. It can be a way of consolidating multiple debts into one manageable repayment, or to secure a lower interest rate. This is a particularly useful strategy for business owners with a good or excellent credit score. However, consolidating debt, even at a lower interest rate, can cost you more in the long term if you extend the term of your loan(s).

That said, refinancing a loan can come with complications; for example, some lenders may impose penalties on businesses who fully repay their debts earlier than agreed. Thus, employers should read the terms of existing loan agreements, before committing to this strategy.

Cutting costs  

Employers must also develop a sustainable budget and identify where savings can be made to finance repayments. This may seem like an obvious step, but some businesses may be unsure where to begin.

A good starting point would be to review which office equipment is not used as often as it could be; for example, laser printers or seldomly used office furniture. Employers could look to sell-off such expensive items. Additionally, they may consider purchasing second hand items in the future or shopping around for cheaper suppliers; it may not seem like a big step, but employers may be surprised by the savings they could make in their operational costs.

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Alternatively, businesses owners might consider moving to smaller premises where rent and utility costs would likely be cheaper. Indeed, moving to co-working spaces, or even making the move to permanent remote working could present scope to make further savings.

Of course, no two businesses are the same and certain cost-cutting measures will suit some more than others. So, employers should take their time when assessing their outgoings to understand which cuts, they can make without endangering the business.

Seek advice when needed 

These are trying times for businesses everywhere – even for some of the largest and best-prepared of corporations – and, at times, getting the organisation’s finances in order might seem like an insurmountable challenge. In many cases, therefore, I would recommend that business owners seek further advice.

Depending on the needs of the particular organisation, owners might look to business consultants, accountants, specialised credit counsellors or financial planners for some more focused assistance. These experts are able to assess all elements of an organisation and develop a tailored strategy to suit the businesses specific needs. Especially during difficult economic periods when businesses might seek to pool their resources, this can be a great source of help when navigating debt.

All in all, business owners should remember that they do not have to weather the storm alone. With sound advice and perseverance, companies should be able to lessen their financial burdens, and find a workable and personalised repayment strategy.

Daniel Groves outlines five key steps SMEs can take to keep their finances secure.

Money problems come in all shapes and sizes, but more often than not the biggest financial issue which can make or break a small business is cash flow. Studies have shown that more than 80% of small businesses fold as a result of poor cash flow. These mistakes are easy to avoid, if you plan for them before they become a problem.

Make sure bills are paid on time

It might sound obvious, but never underestimate how important it is to pay your bills on time. Not only does this mean they won’t go up in cost due to interest charges but missed payments can also affect your credit rating, storing up all manner of issues further down the line. 

Technology is your friend in making bill-paying as frictionless as possible. For regular bills, set up a Direct Debit to save you time and money. If you’re unsure what digital tools your bank has to help you pay your bills, talk to them. It is in their best interest to make sure that you are on top of your funds.

Save for emergencies

In these increasingly uncertain times, it is vital that you put some money aside for unforeseen emergencies. It is in your best interest to have an emergency rainy day fund. Problems will - and do - come up, and often the best way to keep your options open when trouble strikes is to have funds readily available. A good way of doing this with minimal effort is taking 10% of your profit each month and moving it to a separate bank account.

Now is also a prudent time to look at your company's outgoing expenditures and cut back. Instead of travelling for a face-to-face meeting, save time and money (and stay safe) by hosting that meeting online. You can then take those saved expenses and place them in your emergency fund account, away from the money you use for running the day-to-day.

Problems will - and do - come up, and often the best way to keep your options open when trouble strikes is to have funds readily available.

Keep a close eye on payments owed to you

It is very easy when running a small business to get bogged down with the day-to-day operation and not keep track of unpaid customer bills. Sending out an invoice is one thing, but it’s quite another to make sure it has been paid on time and to chase if it hasn’t. There are great tools and software which can automatically send reminders to chase late payments, helping you avoid escalating it to a legal issue. This, in itself, can be a lengthy and expensive process. 

You are running a business, not a charity. So make sure you are paid what you have worked or you won’t be in business for very long. 

Get help if you need it

Staying afloat can be extremely hard for a small business in any industry - asking for help isn’t a sign of weakness. If you’re struggling to chase payments or keep track of them, it’s better that you get help (either from technology or a trusted adviser), so you can focus on creating value for your customers. Financial worries can put real strain on business owners if they don’t have experience trying to manage it. 

 “Whatever you do, please don't do it alone,” says Jeremy Frost of Frost Group, a company specialising in business advice for companies struggling. “It can be a frightening time for you but it is possible to solve business problems, especially cash flow issues. If you concentrate too much on the minute details of a problem you miss the big picture.”

Track your financial statements

It is key that you pay close attention to your financial statements. Carefully follow what is going out and what is coming in. If you don't know how to read a financial statement, you can use online guidance to learn as soon as possible. Alternatively, you could employ someone to read it for you if it’s really not one of your strengths or you want to free up some mental processing power to continue to grow your business. Do this by hiring a freelance account manager, rather than bringing a full-time financial team in-house. 

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Final thoughts

It is better to be in control of your finances at all times so that you can react and solve any problems before they escalate. Every company will have one month where their outgoings surpass their incomings but it is up to you to see it, identify why that has happened and make sure it is not a regular occurrence. Don’t assume these issues will just go away. 

Lee McDarby, Managing Director, Corporate Foreign Exchange and International Payments at moneycorp, offers Finance Monthly his advice for SMEs and corporates looking to keep their financial requirements stable as they expand.

With Brexit on the horizon, and COVID-19 likely to be around for a little while yet, it’s more important than ever that businesses across the UK have access to experts, and know that they can access their money at any time, wherever they are in the world. In the past decade, the payments sector has moved at an increasingly fast pace. With this continuing to develop, there’s a need to further drive innovation that supports financial inclusion for all corporates, SMEs and individuals, to enable international success.

If you’re currently looking at expanding your business to different markets, or adapting your supply chains, and thus payment routes, it’s important that your banking partner can take the stress out of your financial requirements, enabling you to focus on elevating your business. So, what should you be on the lookout for when it comes to your banking and FX needs?

Multi-currency International Bank Account Number (IBAN)

The multi-currency IBAN supports British businesses looking at international expansion. We know that some traditional banks require you to open multiple bank accounts for different currencies – bringing an increasing amount of hassle to the simple act of receiving a payment. It can also take months to open multiple euro and/or dollar accounts, so a modern multi-currency IBAN is the hassle-free and significantly simpler option.

With one multi-currency IBAN, businesses can receive international payments in varying currencies across the globe. Supporting UK corporates to enhance their supply chain and take their business to the next international step in their global expansion.

With one multi-currency IBAN, businesses can receive international payments in varying currencies across the globe.

Security of funds

When choosing a provider for your payments and foreign exchange needs, it’s important to ensure it has safeguards in place to protect your funds. There are a number of specifics you can look out for to ensure the security of your accounts. These include:

The human touch

Customer service is key when it comes to the relationship between a business and a bank. While it is imperative that customers have 24/7 access to their account regardless of where they are in the world, talking to a person at the other end of the phone is just as important.

While our society has moved to be digital-first, when there’s an issue, the first thing the customer wants is to speak to someone. As such, access to a support team, across a multitude of channels, is irreplaceable when you need it most. To support all of your customers across the entire spectrum, it’s imperative that customer services are multi-faceted.

Ease and speed

Varying customer needs are echoed in the diverse range of Application Programming Interface (API) solutions. For an SME, corporate, or individual trading in various currencies across the globe, a seamless API that integrates ease of user experience, along with speed of delivery is crucial. However, one API doesn’t fit all.

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At moneycorp Bank, we’ve been able to seamlessly align the agility of fintech with substantiative banking networks to create bespoke API solutions, dependent on the client requirements. In addition, the central API endpoints built as part of the programming allow clients to have access to the core banking facilities on a multi-currency wallet, peer-to-peer facilities for instant transfers, global and local beneficiary validation, view balances, 24/7 multi-bank dealing, international payment and transactional and statement capabilities as standard.

Having a banking system that offers API integration gives you access to an array of benefits that leave you with more time to invest into your business. It also gives customers the capability to monitor exchange rates and automate conversions at a desired value, putting FX hedging tools right in the palm of their hands.

Looking ahead

Fundamentally, whilst we are currently navigating extraordinary times, there are also opportunities afoot for UK businesses to look at expansion. At moneycorp Bank, we believe that by picking the right partner for their payment needs, businesses can assemble best-in-class services when it comes to technological advancements in the sector, security, and customer service – without needing to trade one for the other. This in turn, will allow companies to start a new journey on the international stage, putting their best financial foot forward.

Xero’s analysis revealed a 26% decrease in small and medium-sized enterprises (SMEs) during the month of April, and a 28% increase during May, compared with figures from the previous year.

It also found that invoices are taking longer to be paid, with the average waiting time for SMEs rising from 30.7 days to 38.5 days since February – an increase of a little over a week.

The platform also identified a decrease in small businesses’ employment rates. In an analysis of payroll data, it emerged that small business employment fell by 6% between May and March despite the influence of the government’s coronavirus job retention scheme, which is set to be scaled back in the coming months.

Hardest hit were small businesses in the hospitality sector, which shed 11% of jobs in April and a further 3% in May. Revenue-wise, the sector saw an average decrease of around 57% in April and 53% in May. The next closest sector was arts and recreation, which saw losses of 41% for both months.

These findings form the basis of Xero’s Roadmap to Recovery manifesto, which calls on the government to provide extra support to help small businesses rebuild in the wake of the pandemic.

The pandemic has had a devastating impact on business,” said Gary Turner, UK managing director of Xero. “As our customer data shows, jobs are being lost and the creation of new ones will depend on how quickly the economy can be rebooted.”

Leonardo Brummas Carvalho, CEO of Wealth Management at ITI Capital, explains why the social responsibility of finance is coming to the fore.

The COVID-19 crisis has not just posed a huge threat to human life on a global scale, it has caused mass devastation for thousands of businesses and all but crippled the economy. As a society, the extent of disruption caused by this pandemic has not been seen since the world was shook by war in the 1940s, and the financial impact has completely overshadowed the recession in 2008.

However, the comparisons to 2008 stop there. Over a decade ago, banks and financial services organisations were embracing high risk decisions as a matter of routine, where all the risk eventually fell in the hands of the consumers and working people, millions of whom were left unemployed and facing financial turmoil. The banks, on the other hand, walked away comparatively unharmed, having been bailed out by taxpayers.

As a result, the already questionable reputation of bankers, financial services and investment specialists plummeted further. Even today, business owners, consumers and mortgage owners do not feel that traditional financial service providers have their best interests at heart.

But, due to COVID-19, many consumers have no choice but to turn to banking services: taking out important investments to keep businesses afloat, to manage personal finances and to meet credit debt payments.

Thus, financial institutions have not just the opportunity, but the responsibility to win back the trust of the general public with deep pockets and generous investment – helping to boost the economy and support independent businesses and struggling individuals at a time when they need it most.

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Whilst it must be acknowledged that central and consumer banks in the UK have already introduced unprecedented emergency measures, such as mortgage and credit holidays, and cut interest rates on loans to 0%, they still could do more to fulfil the social responsibility they are now liable for and redeem themselves in the eyes of the public for actions in the early and mid-2000s.

Banks in general play a fundamental role in society, as they act as an intermediary in regulating credit and loans to the public – throughout history, banks have operated by awarding loans almost exclusively to large corporations and high net worth individuals who can guarantee repayment.

Today, the opposite can also be true and many institutions have the option to help communities, vulnerable individuals and propose social impact investments.

Now, in these challenging times, SMEs and workers are more vulnerable than ever, and would be deemed high-risk assets by numbers on a computer screen. Thus, bankers and financial experts must prioritise vulnerable communities, and not just look at the interests of their holders and senior managers, but also customers, employees and more broadly, the entire society.

The good news is that, over the last decade, digital platforms, fintech and cloud and software capabilities have evolved to the point where traditional financial service providers can overhaul operations, and cater to not just the high-paying clients, but to millions of consumers at the same time.

Unfortunately, many big banks are still running slow legacy IT systems, and therefore new technology and app services remain a priority for consumer banks.

Banks in general play a fundamental role in society, as they act as an intermediary in regulating credit and loans to the public.

On the other hand, fintech companies and financial start-ups have spent years dedicating themselves to transparency and high-quality services. At ITI Capital, we have identified the disparity that exists in advisory and investment services provided to high-net worth individuals, compared to the general public. Thus, we have dedicated ourselves to democratising the financial market, ensuring normal, hard-working people on all sorts of different wage brackets, are catered to with professional financial services.

This has all been facilitated by cutting edge technology such as artificial intelligence, which allows us to provide a huge amount of consumers with top-tier, fully regulated financial services which would otherwise only be reserved for high-paying clients.

If the entire financial sector had this mindset in the UK, consumers would be trusting again and businesses and individuals could be comfortable optimistic towards the near future.

So will the attitude from the major banks change from now until the end of COVID-19, whenever that may be?

Of course, government legislation and schemes have, in the short-term, enforced significant social change. The furlough scheme in the UK, for example, has provided millions of workers with financial support at a time when they would have otherwise been laid off by their employers. In the short-term we should hope that shortfalls in government schemes to combat COVID-19 are covered by the financial institutions, providing preferential interest loans to companies who can’t front the cash to pay salaries.

However, as previously mentioned, fintech start-ups and market disruptors are on the rise, and it appears as though the financial sector is naturally transitioning to processes facilitated by automation and artificial intelligence. Thus, within the next decade, we could expect to see fintechs, such as Monzo and Starling, become the new normal for consumer banking. Alternatively, we might see traditional banks embrace the new wave of technology, and self-democratise the financial sector by offering affordable and remote online services.

Regardless, if traditional banks are looking to excel in the new normal, or if fintech start-ups are looking to flourish, they should each prioritise one thing: serving vulnerable communities and society as a whole during the remainder of the COVID-19 crisis and beyond.

This reputation has been particularly prevalent since July 1997, when the region gained independence as a sovereignty and set about establishing itself as a low-tax haven with a raft of lucrative free trade agreements.

In the modern age, however, what is it that makes Hong Kong such an attractive proposition for international investors, and what role does the digital sector play in this?

Accessing a Free Market Economy

The most apt description of Hong Kong was provided by the economist Milton Friedman, who opined that the region was the world’s greatest experiment in laissez-faire capitalism. There can be little doubt that Hong Kong represents the quintessential free market economy, and one that’s built on the principle of lowering trade barriers and minimising corporation tax (this is currently fixed at 16.5% and will not change until 2022 at the earliest).

This is one of the main reasons for the popularity of Hong Kong amongst overseas business owners, who’ll have the opportunity to minimise their operating costs and boost their bottom line profit accordingly.

The low rate of corporation tax is also appealing to forex trading firms, which already benefit from the fact that most brokers don’t charge a levy on currency trading. Not only this, but Hong Kong is now ranked as the fourth-largest financial centre in the world with a 7.6% share of the global forex market, while the region is also home to the second-largest exchange in Asia (behind Singapore). Hong Kong is also renowned for having the fifth-largest stock exchange and largest initial public offering market in the world, and this highlights the appetite for domestic and international investment in an open and prosperous economy.

The low rate of corporation tax is also appealing to forex trading firms, which already benefit from the fact that most brokers don’t charge a levy on currency trading.

The nature of Hong Kong’s economy also contributes to an incredibly influential and cash-rich consumer base, which ensures that firms are able to optimise turnover on an annual basis.

In US dollar terms, one in seven Hong Kong households exist in the millionaire category, and while real estate represents 70% of these assets, there’s clearly an opportunity for international businesses to thrive and target affluent consumer demographics.

How is the Digital Sector Faring in Hong Kong? 

Despite the issues that the region has faced in terms of social unrest and angst, it continues to record average annual GDP growth of around 5% in real terms. One of the key factors here is also the rise of digital and web-based businesses, with Hong Kong’s relaxed commercial climate ideal for low-overhead and tech startups who wish to target a vast and diverse marketplace.

The open nature of Hong Kong’s economy also means that it’s easier than ever for companies to invest in advanced technologies and computational infrastructure, creating a competitive and potential lucrative landscape where profit margins are often higher than in developed economies.

Make no mistake; there’s a clear alignment between the values of Hong Kong’s economy and the ambitions of domestic and overseas SMEs, and this continues to build the digital landscape and lead into a far broader economy-wide transformation. Of course, we’ve already touched on the viability of launching a digital forex trading business in Hong Kong, and this is indicative of an economy that’s perfectly suited to online companies and tech-led startups.

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In terms of the best practice, the way in which you open a business in Hong Kong (digital or otherwise) will depend on the sector that you operate in. For example, firms looking to operate in the competitive forex space will need to identify a key differentiator, while also relying on key knowledge and datasets from the Asian marketplace.

The same principle of standing out from the crowd also applies when launching a business in the digital space, with marketing and the ability to target key demographics in Hong Kong also crucial to new ventures.

Across the UK, lenders have approved nearly £27.5bn in government backed loans, through bounce back and business interruption loans, to more than 650,000 businesses affected by COVID-19.

This is an astronomical effort by all involved to keep businesses afloat, but it’s not been quick enough for many ailing businesses. The total amount of business loans available amounts to £330 billion, and businesses should be receiving these funds at a much faster pace then we currently are. Matt Cockayne, Chief Financial Officer at Yapily, explores how open banking may be the solution to these businesses' issues.

It’s clear lending will be needed throughout the year to help these businesses stay afloat as they reopen. And while lenders could be a lifeline for SMEs over the coming months, it’s thought that many believe that future lending or loans are too high risk, or that they just can’t tell what the future holds to lend to businesses. This is likely to cause further frustration for business owners who, until coronavirus happened, ran successful, growing businesses.

This has created a conundrum for the UK business landscape. As we emerge from the initial COVID-19 fallout, businesses need financial support to stay open and to ensure the economy bounces back, but lenders are either too slow or too wary of lending too much to businesses who are facing huge pressures to avoid going bust. To solve this problem, we have to look at new ways of accessing and sharing financial information to make quicker and better decisions. And in open banking, I believe we have a solution that answers these problems and more.

Speed, security and agility

The initial backlash in response to the government's three loan distribution schemes (BBL, CBIL and CLBIL) has centred around frustrations in the time it took to distribute essential funds. To keep up with this demand, lenders have to make faster decisions. But without the right information about the borrower they can’t make them consistently or fairly.

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It is normally standard for lenders to request three months' worth of financial statements, but through the CBILS scheme, lenders must now request six months. This can slow the process down for businesses, providing an added layer of friction in finding and sharing bank statements, and an added layer of delay with the lender having to review the statements manually. Through open banking, lenders can gain instant access to up-to-date financial information and can retrieve historical data in just seconds.

This means they can quickly onboard customers and determine lending limits, without needing to send documentation such as bank statements, ID or other documents back and forth as you would traditionally. By gaining instant access to bank statements and a secure verified source of income, lenders can quickly analyse credit decisions in real-time, and make better, more informed decisions, which is crucial as we begin to step into the new normal.

Lending in the new normal

Up until now, the government has relied on a panel of lenders - established banks and the likes of Funding Circle - to distribute the schemes. But as the crisis continues, more loans need to be disbursed, presenting an opportunity for smaller lenders to play their part to support SMEs too.

One of the biggest struggles of the schemes has been around lenders being unable to meet the demand for onboarding new customers. Some businesses have reported that it is taking longer than expected to open a new account and receive essential funds. However, if conducted through open banking, these processes could be sped up and enable more lenders to operate and offer their services to UK businesses.

One of the biggest struggles of the schemes has been around lenders being unable to meet the demand for onboarding new customers.

This isn’t just a benefit for lenders in terms of meeting soaring demand, it also means an added layer of trust and greater loan personalisation for customers. Lenders can make fairer and more accurate decisions, based on a customer's financial picture.

Fueling the economy post-pandemic

With lenders able to grant more loans quickly and efficiently through open banking, businesses will have faster access to the much-needed cash required to stimulate the economy; keeping companies running, people in jobs and ensuring spending continues across the country. Lenders will also have the opportunity to monitor the borrowers finances after the loan has been granted, with the borrowers consent of course, to offer continued support and create future offerings if required.

As more businesses across the UK seek government support, the role of lenders will continue to grow in importance. But rather than shut up shop due to the risks at play, they should utilise open banking to make better, informed choices to ensure the economy recovers quickly.

Not only will it make you more efficient once life returns to normal, but it will also help to save you money which can be used to reinvest in staff and other areas of your business. These are some of the reasons why COVID-19 is the perfect opportunity to reorganise your finances and the ways in which you can do so. 

Work with specialist accountants

When dealing with finances, specialists can offer targeted advice that offers greater results. But particularly during these uncertain times, gaining professional advice and guidance is key, so now is a great time to work with accountants or financial specialists who really understand the nuances of your industry. 

Once you have your plan in place, you need to make sure that it is financially viable, to make sure that you are realising a profit,” says OS Accounting, a chartered accountancy firm that specialises in working with SMEs. “Any banking or financing house will expect to see realistic and well-considered financial budgets and forecasts and translating an idea into facts and figures needs experience."

Make it easier for customers to pay

No sale is complete without your customers paying you for your service or product. But with an increased need for contactless payments in light of the pandemic, it’s vital that businesses adopt and embrace cash-free payment options

From PayPal to Amazon Pay and Apple Pay, there are various options to choose from that will make it easier for your customers to pay you to keep your business taking an income. 

With an increased need for contactless payments in light of the pandemic, it’s vital that businesses adopt and embrace cash-free payment options

Go digital

It’s much easier to keep track of all of your financial documents if the business is digitised. While lockdown forces us all to adopt more downtime, there’s time to make the switch to a more digital way of working. 

Not only does it make accessing these documents easier when working remotely, but it also provides a safer form of storage as leaving hard copies in filing cabinets makes it easy for data to be stolen. There are many online tools and software options that will help you digitise your business, particularly where finances are concerned. However, make sure that all of your documents are backed up with a cloud-based service so that you can be sure they are secure. 

Do the things you’ve been putting off

Now is the time to make use of more time and do the things you’ve intended to do for months but haven’t had the time. Use the lockdown to take stock of how your business is operating and make the necessary changes – this might include separating personal and business finances more efficiently by opening a separate bank account or tracking and auditing your expenses.

Whatever financial tasks that have been sitting on your to-do list for a while can now be ticked off to make the best use of your downtime. 

Have regular finance meetings

COVID-19 offers a chance for a fresh start in numerous ways, but particularly where processes and systems are concerned, so get into new habits that will help streamline your business processes for the future. One way to do this is to hold regular weekly finance meetings so you can regularly keep track of income, outgoings and expenses. 

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Money is tight for some SMEs and may be fluctuating more than usual during the pandemic, so it’s a great time to gain an understanding of where your money is going. By having this knowledge, you’ll be able to avoid the liabilities that can bring many businesses down in order to keep it running productively and profitably. 

Final thoughts

Businesses across a host of industries have found themselves in unchartered territory since the COVID-19 pandemic began, but it has hit SMEs harder in many cases. By making use of this time to reorganise the financial aspects of your business, you can hit the ground running once life returns to normal and ensure that your business continues to turn a profit throughout.

Now more so than ever, it is crucial that small businesses use all of the resources at their disposal to attract leads, capital, and revenue. If you have concerns over how your business will survive and thrive in the coming months, then it's time to become more adaptive.

Businesses of all sizes and industries will need to be more competitive in order to cut through the noise and capture a slice of a shrinking customer and client base.

Fortunately, there are resources out there for businesses just like yours that can ensure your business model becomes more targeted, leaner, and more effective. Here are 10 essential tools that will bring more capital to your business in 2020.

Automated Mailing Software: Sendinblue

Precise, tailored, and personalised marketing campaigns are a powerful way of ensuring that your business reaches customers and clients more effectively than the competition. If you want to stop your marketing emails from heading straight to the Trash folder, then use an automated email personalisation tool like Sendinblue, which allows you to automatically tailor emails based on the details of those on your mailing list.

SEO Tools: SEMrush

The vast majority of consumers now conduct web searches about a product or service before making a purchase. That's why making sure your business appears on the first page of Google results can be the difference between success and failure. One of the most comprehensive Search Engine Optimisation tools around right now is SEMrush, which provides users with detailed information on the keywords, outbound links, and formatting needed to push their websites to the top.

The vast majority of consumers now conduct web searches about a product or service before making a purchase.

Lead and Contact Generation: Lusha

The key to effective lead generation is quality data. To boost the productivity and efficiency of your sales team, the B2B lead generation tool Lusha can help. This smart piece of software scans the LinkedIn profiles of potential clients and gives you all of the essential information you need to reach out to them in a targeted, effective manner. This simple web plugin will give you a contacts list that you can actually use.

Social Media Campaign Planning: Hootsuite

If you don't have a comprehensive, goal-oriented social media campaign, then you are already falling behind your competitors. Building a brand identity and a clear voice is essential for small business success - something that cannot be achieved in the modern age without social media. Using a social media management tool like Hootsuite will allow you to curate professional SM campaigns and track your success and engagement throughout.

Content Marketing Resources: Feedly

Content marketing is now used by a staggering 86% of B2C marketers, as it has been identified as one of the single most effective ways to reach diverse audiences. Of course, you will want to avoid the mistake of simply creating content on the fly and hoping that it sticks. With Feedly, you will receive bespoke content marketing suggestions based on data about your company, industry, and target audience.

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Influencer Marketing Platform: Fourstarzz Media

An increasing number of both B2B and B2C businesses now rely on a network of influencers and micro-influencers to boost their profile and generate sales. Of course, it can be exceedingly difficult to reach out and connect with influencers on your own. That's why companies like Fourstrarzz Media exist, to connect you with relevant influencers that they know are happy to market your products and services to their audiences.

Spend Management Software: Spendesk

If you're a small business you likely already operate on thin margins. If you want to widen this margin by reducing waste, then comprehensive spend management software is crucial. With Spendesk, you can track every penny that goes in and out of your company, in order to use your cashflow more efficiently. In addition, Spendesk's automated expense report and payslip generation platform will save your company time and money.

Small Business Loans: SBA

Whether you're just starting out in business or have been in the game for years, it's important to remember that help exists for when times are tough. The Small Business Administration is an extensive platform of government and non-profit-backed loans and credit available to small businesses. If you want a loan to help your business grow, this is the most reputable resource to apply for it.

Whether you're just starting out in business or have been in the game for years, it's important to remember that help exists for when times are tough.

Visual Content: Adobe

Engaging, aesthetically appealing visual content will go a long way toward getting your business noticed by potential leads. You might not have the resources to hire a full-time graphic designer, but that doesn't matter. With Adobe, you can create stunning, cross-platform visuals that are guaranteed to set you apart from the competition and enhance your brand identity.

Free Web Hosting: GoDaddy

If you're in need of a web host that is cost-free, high-quality, and secure, then head to GoDaddy to create a business website that won't cost you a penny. GoDaddy also has a range of helpful tools to get your website off the ground and ensure that it is SEO-formatted, visually appealing, and user-friendly. For business newbies, this is an essential resource.

With these tools, you can set your business above your competitors and attract additional levels of capital through increased sales, revenues, savings, and funding.

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