News

Domestic market holds most growth hope for SME sector

Almost two thirds (63%) of SMEs believe that the domestic market represents the greatest growth potential for their business, according to a new survey.

13% cited the European Union as having the most growth potential for them, and just 12% said that they have set their sights on exporting to the Middle East and Asia.

The figures are drawn from the latest Close Brothers Business Barometer, a quarterly poll that seeks the opinion of SME owners and senior management on a range of issues that affect their business.

Mike Randall, CEO of Close Brothers Asset Finance said: “It’s interesting to learn that despite the government’s work to encourage UK businesses to export in an effort to rebalance the economy, so many seem hesitant to look further afield to achieve their potential.

“Just over half of those surveyed in our Business Barometer said that they export their products or services. A fifth said that they don’t see a need to do so. However, if the UK is to hit the government’s £1tr exports target by 2020, then businesses may need to step up their efforts to attract opportunities and secure exports in faster-growing emerging economies.”

The Close Brothers Business Barometer also asked businesses how they finance their exports. Just under a quarter said bank overdraft and a fifth use asset finance.

Mike added: “There’s no reason that small firms shouldn’t aim at the export market to achieve growth. Recent figures from UK Trade and Investment demonstrate that businesses that export are on average 34% more productive and 12.5% more resilient than businesses that don’t.

“If suitable finance is the main barrier, then it needn’t be. Asset finance offers a cost effective and efficient way to invest in your business to ensure it has the tools it needs to meet the demands of an export strategy.”

For more information visit www.closeasset.co.uk

Hong Kong still costliest place to live and work

Hong Kong is the world’s most expensive city for companies to locate employees, significantly ahead of London and New York, which have been vying for second place over the past two years. Paris completes a list of the top four cities where simply renting living and working space for a single employee costs more than US$100,000 a year, according to latest analysis from international real estate adviser, Savills.

The Savills world cities live-work index reveals that it now costs an average of just under US$76,000 a year per employee to rent residential and office space in a world city, a 21% increase since 2009, when most city rental markets bottomed out.

In Hong Kong, the cost of living and working space per employee averages US$123,000 a year, 1.6 times more expensive than Singapore, 3.8 times more than Shanghai and some 4.4 times more expensive than Mumbai.

While total live-work costs remained broadly stable across the index over the past year, there were exceptions. They rose by a stratospheric 41% in Dubai, albeit from a relatively low base, to rank the city seventh most expensive, although the high costs in part reflect a particularly generous office space allocation per worker, a product of the city’s previously high-supply, low rent era. By contrast, costs fell -12% in Mumbai, which ranks as the cheapest location at just US$28,000 per employee per year for all live-work rental costs.

See the latest world city rankings.

Yolande Barnes, director of Savills World Research said: “These findings go some way to demonstrating the rebalancing of world economies as more mature old world cities demonstrate stable growth in this recovery cycle. New world city growth has slowed markedly, albeit this trend has been slightly counterbalanced by the emergence of new world city real estate markets – notably Rio de Janeiro and Dubai.”

Creative space discount/financial sector premium

Costs vary significantly from location to location across most cities in the index, with a real discount for space typically occupied by creative industries, including tech, compared to prime financial district space. The new Savills creative space discount measure demonstrates the need for businesses to look beyond headline, prime rental space costs when assessing corporate occupancy costs.

Hong Kong may be the world’s most expensive city in which to accommodate financial sector staff (who each occupy live-work space costing an average of US$144,000 a year), but it is only the third most expensive for tech and creative employee accommodation. Similarly, second-placed London’s creative space discount of -36% ranks it fourth most expensive for these companies, while New York offers creative companies a space discount of just -16% ranking it second most expensive.

Only in Paris and Sydney is there no discount for creative space, meaning that a tech company will pay more for live-work space in Paris than in any other world city, including Hong Kong.

Yolande continued: “The biggest financial sector premium is seen in Moscow, where Russian money is investing once again, pushing up demand for space in the city. Similar forces also seem to be at play in Dubai, which has seen the impact of Middle Eastern cash in a market that has shown significant growth, prompting talk of cooling measures.”

View the financial district premiums.

The publication of this index marks two new entrants to the Savills world city ranks – Dubai and Rio de Janeiro.

Yolande continued: “A world class city status has as much to do with profile and prominence on the world stage as it has to do with economics or size. Rio earns its place in our index as a result of its changing status as upcoming Olympic host, albeit it enters at a low value base, while Dubai is clearly flexing its muscle as the real business and investment hub of the Middle East. Price rises in the city are a clear reflection of asset price inflation over the recent past.”

Peer-to-peer lending unpopular with over eight in 10 savers

With interest rates on savings accounts remaining at a historic low, peer-to-peer lending has been hailed as another way to boost investments. However, savers clearly still need some convincing – the majority (84%) would not consider investing their money with a peer-to-peer lender, according to new research from uSwitch.com, the independent price comparison and switching service.

Although official figures show the UK’s peer-to-peer lending sector increased by 121% during 2013, only 2% of savers are currently using a peer-to-peer lending platform. Six in 10 consumers (59%) are reluctant to use a peer-to-peer lender because the industry is not covered by the financial services compensation scheme, while four in 10 (39%) say that it is because it is not regulated by the FCA. A further half (49%) are sceptical about using peer-to-peer lenders simply because they don’t know enough about them, and another fifth (22%) are weary about using a firm they haven’t heard of.

Some may argue that the introduction of regulation on the peer-to-peer lending market from April will boost consumers’ interest in the platforms, but barriers still exist. A quarter (25%) don’t want to lend money if they don’t know where it’s going, and one in ten (9%) don’t want to use an online platform.

Meanwhile, poor cash ISA rates have clearly taken their toll on consumers’ savings with one in four (25%) expecting to earn no more than £50 in interest on their savings. As a result, consumers are looking elsewhere to stash their savings with over four in 10 (43%) using their current account. Worryingly, a further one in 10 (10%) think keeping their money in a piggy bank at home is the best option when in fact this means their money is being eroded by inflation. Almost six in 10 (57%) have opted for an instant access savings account, while a third (34%) have gone for fixed term savings accounts of between 1 and 5 years.

Jafar Hassan, personal finance expert at uSwitch.com, said: “While the take up of peer-to-peer lending has been low so far, regulation should provide additional peace of mind. But to encourage more widespread adoption, peer-to-peer lenders need to convince consumers that their money is safe, and they can’t simply rely on regulation to do this. The fact is that many consumers are still skeptical about lending money if they don’t know where it’s going; others simply don’t want to use an online platform.

“People fed up with poor ISA rates but nervous about peer-to-peer lending should consider keeping their money in a high interest current account. Nationwide’s Flex account offers rates of up to 5% while Santander offers up to 3%.

“But this doesn’t mean consumers shouldn’t write cash ISAs off – with normal savings products and current accounts, basic rate taxpayers hand over 20% of the interest to the taxman. And rates may still improve – last year, we saw a flurry of fixed-rate cash ISAs hit the market in the run up to the new tax year from providers such as NatWest, so everything is still to play for.”

For more information visit www.uSwitch.com or call 0800 093 0607

WEX Europe joins the Guild of Travel Management Companies

WEX Europe, a leading provider of corporate payment solutions, has announced that it has joined the Guild of Travel Management Companies as an industry partner.

Representing a diverse range of travel management companies – from global companies to small independent specialists and top regional agencies – the Guild of Travel Management Companies (GTMC) is the voice of business travel and acts to lobby those who have an impact on the business travel community, together with promoting the activities of its members as the best in quality and value to the business traveller.

WEX Europe holds extensive experience in payment solutions for the travel and leisure industry, helping clients maximise profitability and reduce cost by transforming how they manage payments to suppliers, employees and customers. Through its virtual payments solution, WEX Europe has helped the travel industry revolutionise the payment processes, and its involvement with the GTMC will act to further strengthen its position within the business travel payment market.

Sarah Keane, commercial director at WEX Europe said: “GTMC is the UK’s leading professional body for travel management companies and we absolutely see the merit of becoming a member.”

“We pride ourselves in providing individual solutions for our clients and look forward to becoming an even larger part of the strategies that help address the issues within the travel industry, and ultimately working to offer wider solutions to our current and future customers.”

Paul Wait, chief executive for the GMTC said: “We are delighted to welcome WEX Europe as a partner to our diverse network of companies. From airlines to hotel chains, from rail and car rental companies to technology providers, the GTMC brings together key service providers within the business travel supply chain. We can clearly see the benefits our members receive from working with WEX Europe whose Virtual Card solutions for travel supplier payments increase efficiency and control and optimise reconciliation whilst at the same time providing new revenue opportunities. We are looking forward to a long relationship with WEX Europe and continuing to grow our partnership base in 2014.”

For more information visit with http://www.wexeurope.com or call 0845 508 4579 or email info@wexeurope.com

For more information on GTMC please visit www.gtmc.org or call 0207 268 3540 or email info@gtmc.org

All commercial finance Expo stands sold out

All exhibitor stands are now sold out for the 5th NACFB’s annual Commercial Finance Expo, being held for the fifth year running. With less than four months to go before doors open at the Pavilion at Birmingham’s renowned NEC, the NACFB is having to investigate options to expand the size of this year’s show, and is aiming to make a number of new stands available to those who would like to exhibit but have been caught out by the rapid and enthusiastic take-up.

There are now more than 100 lenders registered with the NACFB for the first time in the Association’s history, and last year more than 1200 visitors turned up on the day. This goes some way to explain why the NACFB is having to knock down walls to build an event big enough to match the appetite and expectations of lenders, brokers and small business owners across the country.

Doors for this biggest industry event of the year open at 9:30am on Wednesday 25th June. As every year, it’s free to attend, and as well as being an event where deals get done and genuinely useful contacts get made, it’s also a lot of fun.

Interested exhibitors and delegates should register online at www.commercialfinanceexpo.co.uk

Asset based finance sector – best quarterly performance since recession

The Asset Based Finance Association has today announced its strongest set of quarterly figures since the recession hit. The new figures (quarter four, October – December 2013) show both the highest ever quarterly funding balance and record annual sales turnover for companies using asset based finance.

Total funding advances to clients has now hit £18.3bn, the highest quarterly balance ever. In December 2009 this balance was £13.9bn, but since then it has grown steadily most quarters to now hit over £18bn just four years later, an aggregate growth of some 32%. The balance has grown 11% in the past year alone and 3.5% in just the last quarter.

Matching this record breaking growth is the sales turnover from companies using asset based finance. Total client sales for 2013 have reached over £275bn, a growth of 10% year-on-year. In 2010 the total turnover figure was £211bn; this shows a cumulative current growth of 30 per cent in three years, underlining just how much asset based finance has supported UK and Irish firms with their sales growth since the financial crisis.

The quarterly sales figure of £72.7bn is also a record high, pipping last quarter’s figure by over £1bn and it is only the second time this has been over the £70bn mark for a single quarter. The export figures for both factoring and invoice discounting are also showing robust growth, with year-on-year increases of 18% and 12% respectively. This indicates that UK and Irish firms are successfully working hard to exploit sales opportunities worldwide that complement the economic recovery currently underway.

Apart from financing growth opportunities, the demand for asset based finance is also being driven for working capital needs. A new report from commercial payment system Sage Pay sees small and medium sized businesses (SMEs) being owed a staggering £55bn in unpaid invoices. This is even after the Government warned large corporations to make payments on time, but the problem is continuing, with two thirds of firms spending weeks attempting to secure payment for bills. This all underlines just how important factoring is to SMEs, allowing them to focus on actually running a business rather than chasing up unpaid invoices.

Kate Sharp, chief executive of the Asset Based Finance Association, commented: “Seeing record numbers for both funding and sales turnover makes a big statement that the asset based finance sector is performing really well, possibly the best it has ever done. It is providing the largest amount of funding ever to over 43,400 clients, which in turn is helping them to hit record amounts of sales, not only just in the last quarter but year-on-year and over the past three years. The sector is clearly one of the most important in supporting British and Irish SMEs, whether maximising new sales opportunities or managing the growing issue of late payment. It is extremely heartening to see these figures and we hope they continue to show such strong and persistent growth in 2014.”

FCA confirms tough new rules for £200bn consumer credit market

The Financial Conduct Authority has confirmed the final rules that will govern the £200bn a year consumer credit market, which includes approximately 50,000 firms, from 1 April 2014.

The new rules will result in changes for how payday lenders and debt management companies treat their customers including mandatory affordability checks for payday borrowers and giving the FCA the power to ban any misleading adverts from payday lenders.

Martin Wheatley, the FCA’s chief executive, said: “Millions of consumers access some form of credit each day, from paying for everyday goods by credit to taking out a payday loan. We want to be sure that the market works well when people need it – whether that’s for one day, one month or longer.

“Our new rules will help us to protect consumers and give us strong new powers to tackle any firm found to be overstepping the line.”

The FCA will take a tough approach to consumer credit with stronger powers to clamp down on poor practice than the previous Office of Fair Trading regime. Our supervision of firms will be hands on and we will closely monitor how providers treat their customers, in particular those operating in higher risk sectors such as credit cards, debt management and payday. We will respond quickly to any issues that are identified and there will be swift penalties for any firm or individual found not to be putting consumers’ interests first, including possible enforcement action and consumer redress.

The rule changes announced today will give consumers additional protection from rogue practices and put the onus on credit providers to ensure that they treat customers fairly at all times.

The biggest changes come for payday lenders and debt management companies, including:

– Limiting the number of loan roll-overs to two

– Restricting the number of times a firm can seek repayment using a continuous payment authority (CPA) to two

– A requirement to provide information to customers on how to get free debt advice

– Requiring debt management firms to pass on more money to creditors from day one of a debt management plan, and to protect client money.

Consumer credit providers will need to ensure that they give customers the right information to make informed choices, that their services meet consumer needs, and that people in difficulty are treated fairly. The FCA has also confirmed the following approach:

– Firms that do higher risk business and pose a potentially greater risk to consumers will face an intense and hands on supervisory experience

– A robust authorisation gateway to ensure that any firm or individual authorised to do consumer credit business is fit and proper, and that firms have suitable and sustainable business models.

– Dedicated supervision and enforcement teams will crack down on poor practice, money laundering and unauthorised business. Firms that break the rules may face detailed investigations and tough fines.

FCA regulation will apply to any firm or individual offering overdrafts, credit cards and personal loans, selling goods and services on credit, offering goods for hire, or providing debt counselling or debt adjusting services to consumers.

NACFB appoints Shawbrook Bank as lead sponsor

The National Association of Commercial Finance Brokers has appointed Shawbrook Bank as its principal sponsor for 2014.

As main sponsor, Shawbrook will be working with NACFB as it continues its tireless work to offer support and guidance to the commercial finance industry and grow its profile and influence.

A strong advocate for the sustainability of the commercial finance industry, Shawbrook will be present at NACFB’s events during the year and will be closely involved in its training initiatives for brokers. The bank will play a key role in supporting NACFB’s extensive programme of seminars, which are intended to help its members keep abreast of developments in the market and ensure that they are working to the highest industry standards.

Shawbrook’s commercial mortgages and asset finance divisions have been working with NACFB brokers since the bank’s launch in 2011.

Adam Tyler, CEO of the NACFB said: “Shawbrook has really taken the commercial finance market by storm since its launch in 2011, so we’re delighted to be working with the bank as our sponsor in 2014. Like many new entrants to the commercial finance market, Shawbrook sees the broker channel as integral to its business so we’re excited about our partnership over the next year.

“2014 promises to be a great year for NACFB and its members. As well as continuing to guide and support our members, we’ll be shouting louder than ever to ensure the wider business community – from government stakeholders to SMEs themselves – knows and understands the crucial role NACFB brokers can play in accessing finance. With Shawbrook as our sponsor we look forward to raising the profile and standards of the industry even further.”

Stephen Johnson, managing director of commercial mortgages, Shawbrook Bank said: “Being chosen as the lead sponsor of the NACFB this year is an opportunity for us at Shawbrook to demonstrate just how committed we are to the commercial intermediary market. We strongly believe in the work the NACFB is doing to support its members and we look forward to helping its brokers expand their businesses as the market improves. The financial services sector is undergoing fundamental regulatory change and this will present challenges to the commercial finance industry. We will be working side by side with the association to ensure we have a sustainable and thriving industry that benefits its members and supporting patrons.”

For further information please visit www.nacfb.org.uk

New year housebuilding figures continue to rise reports NHBC

The number of new homes registered in the UK in January show a 14% increase compared to the same time in 2013, new figures from NHBC reveal.

The year’s first statistics continue the upward trend seen throughout 2013, which resulted in the highest number of new home registrations since the economic downturn in 2007.

In total 11,489 new homes were registered (8,312 private sector; 3,177 public sector) in January, an increase on the 10,112 last January.

As the leading warranty and insurance provider for new homes in the UK, NHBC’s registration statistics provide significant insight on the country’s new homes market.

Commenting on the latest statistics NHBC’s commercial director Richard Tamayo said: “Our figures show that the industry enjoyed a strong start to 2014 by maintaining the momentum from the previous year. Both private and public sectors reported growth on the same month in 2013 and we look forward to hopefully seeing this trend continue throughout the year to help meet the demand for new homes.”

NHBC UK statistics for November 2013 – January 2014 show that:

– For the rolling quarter November 2013 – January 2014 the number of registrations was 31,482, a 26% increase on the same period last year (24,999). Of these:

– Private sector registrations in November 2013 – January 2014 increased by 23% (22,244), compared with the same period in 2012 (18,061).

– Public sector registrations in November 2013 – January 2014 increased by 33% (9,238) when compared with the same period a year ago (6,938).

NHBC’s primary purpose is to help raise standards to protect homeowners. NHBC is an independent non-profit distributing company, reinvesting all resources in further research and work to improve the construction standard of new UK houses for the benefit of homeowners.

NHBC is the leading warranty and insurance provider for new homes in the UK. NHBC’s ten-year Buildmark warranty covers around 80% of new homes built in the UK, having covered nearly eight million homes since it began and currently protecting around 1.6 million homes. Buildmark has evolved over the years, expanding to cover more areas, offering a greater scope of protection for homeowners.

Reduction in employment claims since the introduction of tribunal fees

A study of 180 companies, conducted by global law firm Eversheds has revealed that since the introduction of employment tribunal fees in July 2013, more than 40% have experienced a reduction in claims, with the biggest apparent drop being in unfair dismissal claims.

Under the current system, claimants must pay an issue fee and a hearing fee. The hearing fee was believed by the Government to provide a second opportunity to settle cases pre-hearing. However the study results indicate that this has not been the case, with only 8% of respondents believing the requirement to pay a hearing fee encouraged settlement and a third (33%) believing the hearing fee has made no difference at all to settlement. Of the remainder, 5% said that the hearing fee acted as a deterrent to settlement.

Other key findings from the study reveal that:

• 44% of respondents believe the extension of the qualifying period for an employee to be able to bring an unfair dismissal claim from one to two years has led to a reduction in employment tribunal claims; and

• 41% of respondents feel that recent changes to Tribunal Rules have enabled them to address weak and vexatious claims.

Geoffrey Mead, partner at Eversheds commented: “Employers’ experience of reducing numbers of claims may explain employers’ apparent complacency regarding the introduction of employer penalties in April 2014. No proud employer will want to be on the receiving end of a new employment tribunal penalty, and yet 66% of employers admit to taking no practical steps, such as reviewing disciplinary and training needs, to prepare for this change.

“As regards mediation, 73% of respondents expressed the view that mediation was always or sometimes successful, and 40% confirmed that they had attempted mediation during the last year.

“Just less than a third of respondents saw the recently introduced £600 fee for judicial mediation, which is payable by the respondent, as a barrier to judicial mediation, though 68% of those questioned felt the fee would make them more likely to use private mediators such as ACAS.

“It is clear that the introduction of fees is beginning to have a real impact on the number of claims employers are dealing with. With UNISON’s judicial review challenge having failed, this trend looks set to continue, for the time being at least, though future challenge and change is possible, if not likely. Mediation, however, clearly still has a valuable role to play in the settlement of disputes.”