The Irish economy has experienced mixed fortunes in the last decade but finally GDP is growing and firms are ready to diversify. Central to the economic recovery, and primed to realise their global exporting potential, are Ireland’s many SMEs – but their success can only be made possible with the best financial support.
The experts at Bibby Financial Services Ireland (BFSI) believe strongly in supporting this ‘powerhouse of the Irish economy’ and helping SMEs plan their financial strategy to insure they can elevate their business to its full potential.
"With the insight gained over ten years operating in Ireland, we understand that SMEs are the powerhouse of the Irish economy,” explained John Mackey, Head of Sales at BFSI. “However many SMEs rarely put the appropriate funding in place in order to grow.”
According to Mackey: “Ensuring that the funding needs of SMEs are met in Ireland in 2017 will be paramount to the growth of the economy.” And it’s a goal he believes BFSI is well positioned to helped deliver.
Founded in 1982, Bibby Financial Services now operates in 13 countries across Europe, North America and Asia. The independent invoice finance company and trusted financial services partner currently supports businesses in over 300 industry sectors, taking on a new client every 53 minutes.
At the heart of the company’s ethos, is its mantra: “We don’t just fund a business, we believe in it.” A mantra that the firm feels is particularly important in supporting SMEs.
Mackey explained: “We carried out a global survey in 2016 that revealed Irish SMEs have to wait longer to be paid that anywhere else in the world. The same survey also highlighted that two fifths (39pc) of Irish SMEs pinpoint cash-flow as the most concerning issue for their business. Whilst invoice financing may not be appropriate for every SME, our funding solutions help our customers release cash which is tied up in invoices.”
Providing a platform for businesses to access the full breadth of funding options available to them is intrinsic to helping SMEs get the funding they need. Last year, the Strategic Banking Corporation of Ireland (SBCI) demonstrated innovation in this area by launching an SME-focused €45 million fund, in partnership with BFSI. Since its launch, the fund has provided €20m of funding, supporting Irish businesses operating in a variety of sectors and demonstrates understanding from policy makers that SMEs need a greater variety of funding options.
Another challenge looming large for many businesses is the impact that ‘Brexit’ will potentially have on trade. “It is very evident that the UK’s withdrawal from the EU provides uncertainty for many local businesses,” said Mackey.
“Potential tariffs on Irish imports from the UK and new border and administration costs are realistic concerns. Already there are signs of lower demand for Irish exports due to loss of purchasing power following the fall in the value of the pound – making Irish exports to the UK 15pc less competitive. A combination of these factors make it clear that Irish businesses need to look beyond the UK for trade.”
He believes BFSI is uniquely placed to help businesses navigate the uncertain times ahead. “Our success and ability to support SMEs lies in our expertise in assessing debt risk, debt protection, export and trade finance,” he explained. “We provide funding to over 10,000 customers globally, handling annual client turnover of over €10 billion. We boast 40 global offices in places like the UK, Germany, France, Poland, Hong Kong, Singapore, Canada and the USA, and are fully equipped to facilitate the entry into, and growth of Irish SMEs, in this global marketplace.”
One success story of a company making the leap into new export markets, with the help of BFSI, is MAAS Aviation. The leading aviation company recently partnered with BFSI to assist in the management of its cash-flow. As an international business working alongside many partners and across multiple supply chains, MAAS functions on 70 day credit terms, putting huge strain on its working capital.
“To manage this, we created a structured funding package to match MAAS Aviation's ambitious growth strategy, which led to the firm increasing its original funding line by €1.3m to €2.8m,” revealed Mackey.
Across the board, client feedback reveals the premium companies place on the relationship-based and flexible approach delivered by BFSI, something reflected in their client satisfaction rate of 93pc.
Traditionally invoice financing has been more popular in England and Northern Ireland than in Ireland, a trend potentially attributed to the fact that many Irish SMEs are more familiar with traditional bank funding, such as overdrafts. But whilst overdrafts have benefits, they also carry potential pitfalls. “Overdrafts are cheaper, but only if your business is so predictable that you can stay within the terms and avoid any penalties,” warned Mackey. “The borrowing rate for invoice finance is about the same, but there is a fee. However, if you want flexibility in your business, then you need capital that matches your level of sales.”
Tailoring finance solutions to match the individual needs of customers is key to ensuring future success. “We weigh up all funding options for our customers and understand the importance of cash-flow and the severe impact that late payments can have on a business,” revealed Mackey. “Our service allows non-invoice finance savvy businesses to receive guidance to ensure they are aware of all the funding solutions available to them.”
He continued: “Most small companies don’t set out a plan to grow – they stay within their overdraft facility and, as such, never realise their full potential. We at BFSI help fund Irish exports to almost 120 countries. Our speed of response, flexibility and global presence are all there to ensure SMEs don’t feel the need to wait any longer. If Ireland is to make a success of 2017, it needs to be building a world-beating export sector. By assisting Irish business in navigating the nuances of exporting, regardless of size or sector, we hope to be part of a booming Irish economy that is constantly looking outward.”