Funding the future in uncertain times
If Ireland is going to make a success of 2017, it needs to be building a world-beating export sector, according to Bernard O'Hare, managing director at Bibby Financial Services Ireland.
“We are living in interesting times with a new president in The White House and our neighbours starting out on the long road to Brexit,” said O’Hare.
“For many Irish SMEs this is background noise, as most of the businesses we speak to are focused on their core business ambitions. But the challenges facing Irish exporters during this period of Brexit uncertainty cannot be underestimated,” he said.
“It has become more important for SMEs to diversify into new export markets and move away from the limitations of the UK’s trading corridor. Fortunately at Bibby Financial Services Ireland we are seeing more firms seeking a funding partner that understands the interplay between business strategies and exports.”
O’Hare said that, in order to succeed, SMEs needed to think about their finances early in the business cycle.
“If a company’s director is speaking to its accountants and advisors as cash begins to disappear, it may be too late. Businesses need to be one step ahead of their needs,” he said.
“A business that plans for the future will be far better prepared for the uncertainty that lies ahead. If firms fail to take action early on, their resources will disappear into servicing debt, and this in turn places a dampener on the company’s export potential.”
O’Hare believes that planning ahead is a good mantra for any business, including start-ups.
“A good business plan will have a clear and concise financial plan that takes into account all the financing options available,” he said.
“A key cause of business failure amongst start-ups is that their capital has been stretched too thinly. Start-ups succeed financially by identifying their needs and understanding their own cash flow requirements,” said O’Hare.
“This is vitally important for those that are intending to grow very quickly and establish themselves. Like an eager dog on a long leash, many start-ups will be pulled backwards if they run out of capital. This is something common to both start-ups and exporters -- growth and exporting requires significant capital expenditure.”
He said SMEs should also be aware that late customer payment could rapidly drain their capital.
“This is by the far the biggest risk to cash flow and where invoice finance can provide support. Our own research found that Irish SMEs experience the longest wait for payments above the USA, Germany, Poland and Hong Kong,” said O’Hare.
“At Bibby Financial Services Ireland we pride ourselves on helping businesses find solutions to their cash flow problems by funding their business against the value of their debtors, unlike traditional banks which provide funding based on balance sheet performance.”
Bibby Financial Services Ireland recently celebrated 10 years in business and its team is upbeat about the future.
“This year we are committed to utilising €45 million funding from the SBCI (Strategic Banking Corporation of Ireland) to help more SMEs get the funding they need in these uncertain times,” said O’Hare.
“Whilst there is uncertainty, it is not a time for doom and gloom. This year we also want to help more SMEs reach their international trade ambitions and help them navigate the nuances of exporting regardless of size or sector.”
Published in the Sunday Business Post, Sunday 29th January 2017