Diversification – Key to success

Nia Williams

March 1, 2009

Case study 1: Unsecured lending

David Vieira is the director of Business Finance Bureaux, a commercial broker in Cardiff. The company has launched a service offering unsecured lending for UK SME’s, after they discovered a provider who did actually want to lend! Vieira explains

With the commercial sector becoming ever more difficult and the ability to place a deal – that 18 months ago would have flown through – frustrating commercial brokers up and down the country, we at BFB thought it was time to look in the market place and see who actually wants to lend. If you’ve experienced the red tape and complexity of arranging a commercial mortgage in the past you’ll appreciate the time and effort it takes to put a commercial deal to together. It takes experience and skill, and above all knowledge of the lenders out there. This has become evermore difficult with sometime daily changes to lenders’ criteria. We are now seeing good business struggling to pay VAT bills, stock or even survive due to the economic down turn.

We have sourced a simple, fast, flexible unsecured business product for brokers to help their clients in small-to-medium sized business in whatever sector, to access much needed funds. This unsecured funding facility is available to businesses that have credit/debit card sales as part of their business. Businesses as diverse as Licensed Premises, Garden Centres, Garages, Florist and even Hotels can now take advantage of simple, fast, cash. With no need to put up any property as security, provide accounts or bank statements, it is proving very attractive to the small business owner. Money advanced can be utilised for most aspects of the client’s business – property improvements, tax bills, expansion, or even cash flow.

How it works

The funder will advance the business money based on its average monthly volume of credit/debit card transactions. A merchant can expect to receive a lump sum roughly equivalent to one month’s average. Repayment is then fully automated through the Lloyds TSB Cardnet card processing system. This is done by a pre-agreed percentage of the merchant’s daily takings on credit and debit cards being directed to the funder. This process continues from the day of funding until the funder has recouped all the receivables purchased by the advance made.

One of the key benefits to the business is that there are no penalties for late or slow repayment – the funder gets paid when you get paid. The repayment amount and the percentage of daily credit/debit card takings directed to the funder are fixed for the life of the contract. The fixed percentage taken by the funder means repayment mirrors the business’s cash flow.


Applicants are typically receiving funds within 15-18 working days of submitting a simple 2 page application with 12 month’s credit/debit card statements.

Additional staff have been recruited and trained to meet the increased levels of enquiries from brokers and SME’s across the country. Approximately 70 per cent of businesses that have already taken advantage of this funding have returned for further monies, proving its popularity and availability. The unsecured product is further complimented by payroll funding, in which the business owner can be helped by having there payroll funded for a period of 2 months again helping cash flow.

It’s refreshing in the current climate to hear of a lender who is actually looking to lend. We know there is a huge gap in the market at the moment and Business Finance Bureaux is extremely pleased to be able to help the SME market and bring a facility like this to the attention of small businesses and mortgages brokers alike, at a time when access to traditional lines of finance are closed or severely restricted. The funding compliments the full range of commercial finance currently offered to our clients.

We have already helped small businesses across the country with this product and they have complimented us on how easy and flexible it is and how they can now carry on with their day-to-day business without the constant worry of finding the next rent or mortgage payment. We have also seen a influx of enquires from brokers, IFAs and accountants up and down the country with clients who have been turned down by their bank, and are only to please to help.

Case study 2:

Simon Wright, a mortgage adviser hit hard by the recession, has turned to network marketing to supplement his income. He has been using his network of contacts to sell Euphony ulitity and telephone services and shares his experiences with us

Q: Who are you?

A: My name is Simon Wright; I have a BSC (Hons) in Construction management and qualified with FPC exams in 1997. I have spent 2 years as a trainee; 5 years as a pensions and investment Adviser; and a further six years as an area sales manager managing a team of mortgage consultants and IFAs. Then I set up my own mortgage business in 2005.

Q: Why did you feel you had to look around for something else to do?

A: During the end of 2007 we saw like-for-like business drop by 5 per cent; during 2008 business levels were down a further 35 per cent, which meant that we were effectively going backwards. I saw the Euphony opportunity as a result of an introduction by a contact I do business with. Clearly there were various people cold calling the office for us to try new areas of business but none of these appealed to us. After three meetings with a Euphony consultant (Mark Joyner) we decided that this was the opportunity we were looking for.

Q: What other areas had you thought about moving into?

A: Credit card and loan reclaim businesses who argue that certain contracts are non-enforceable. Debt management specialists’ overseas properties; where companies guarantee rental incomes.

Q: Why did you choose network marketing?

A: We already try to save money on our clients’ mortgages so this was a natural extension to further reduce outgoings for customers; it was not so much network marketing that we were interested in. As much as it was the opportunity to save customers money at the same time as making money, the fact that Euphony operated in as a MLM, was just an added bonus.

Q: How does it work?

A: Whilst I was never interested in building a team, my main focus was that we would build customer numbers. However we naturally discuss what we are doing with our friends and colleagues, and just over 3 months down the line, we have 70 consultants in our organisation, with the services to match.

Q: What do you have to do?

A: We just do an assessment of customers’ utility bills in the same way we review their mortgages, if we can save them money (which is usually the case) they switch over to Euphony. More and more clients are willing to do this even if it means a saving of £5.00 per month, we feel this is a sign of the times.

Q: How much do you get in?

A: The revenue which has been produced has been invaluable to the business, as this is very much a part time business, the returns are great. As the effort required to get paid for new Euphony customers is quite low, we feel that the hourly rate is more than worth it, I would estimate this at £35 per hour, which equates to a normal mortgage fee, but without the hassle of all the paperwork, or the 6 weeks delay before getting paid.

Q: Anything else you feel would be of interest to mortgage advisers?

A: For most mortgage advisers, we sell the mortgage and have to wait two to three years before we can approach the customer for more business. With Euphony, we can contact all our client base right away as there are no restrictions on utilities in the same way as mortgages. From a customer service point of view, this means we are staying in touch with them – and they love the phone call as it is about saving them money. We have found this to be a win, win situation all round.

Case study 3: Tax assistance

Gary Starr, director of the ICE Group, explains how his company moved into giving help on tax and gives further information about its ICE Tax Assistance service

The hazy days of summer 2007 seem like a lifetime ago. Property prices in the UK were at an all time high, car sales were through the roof and UK businesses were blissfully unaware of the storm that was brewing across the Atlantic – a storm that would spread across the world and lead to the collapse of the banking system, unemployment, recession and the worst economic climate since the Great Depression.

So here we are in March 2009. Whilst the Credit Crunch may not be the first headline that you see on the news or the front page headline on every newspaper that you read anymore, it is certainly something that is at the forefront of every business in the UK.

Whether you are a Sole Trader, Partnership or Limited Company, it is probably fair to say that you will have had a better trading year in 2007 than in 2008. With many businesses struggling for survival, those that have managed to weather through the storm so far will face an unwelcome problem of having to pay their tax liabilities at a time when cash flow has never been so important.

Such is the magnitude of the problem that the government have launched the Business Payment Support Scheme (BPSS) to assist businesses. The BPSS offers businesses in temporary financial difficulty the opportunity to pay corporation tax, income tax, national insurance contributions, PAYE, VAT and other taxes owed to HM Revenue & Customs (HMRC) to a timetable that they can afford and without surcharges on payments involved.

As of 16th January 2009, the BPSS scheme has seen over 20,000 businesses defer over £350 million of tax. Whilst these may seem like impressive figures, the BPSS scheme has barely scratched the surface. There are well over 5 million businesses in the UK and yet the numbers that have contacted the BPSS scheme is a small percentage.

This is the same for the amount of tax owed. Previously reported there was reported to have been billions in unpaid tax owed to HMRC. Although this is likely grown further this year, there is still a lot of tax that hasn’t yet been deferred.

The BPSS Scheme supports tax debts that have accrued since it’s inception in November 2008. The scheme only applies to those who have notified HMRC prior to the debts falling due. With the scheme not taking into account any historic tax that is owed, the UK is sitting on a tax time bomb which is about to explode.

The businesses that are in real danger are those that may have historic tax debts or those that have not availed themselves to the BPSS Scheme. These businesses collectively employ several million UK workers and could face the possibility of ‘company liquidation’ or ‘bankruptcy’.

So what is the solution for a business that has a historic tax bill or a current tax bill and hasn’t contacted the BPSS Scheme before the tax has become due?

That is why the ICE Group launched its Tax Assistance Service. This service assists Sole Traders, Partnerships, Limited Companies and Trusts, and can help with current or historic Self Assessment, VAT, PAYE/NI Contributions, Corporation Tax and Capital Gains Tax.

It works with the tax team speaking with business owners over the telephone. Businesses receive a free, no obligation consultation with a top level adviser who will take full consideration of other creditor commitments and put forward recommendations which are ultimately acceptable to HMRC. Once approved, all payments are made via the Tax Team who will continue to monitor the arrangement with regular 3 monthly reviews to accommodate changing circumstances. The plan might also incorporate arrangements which might have been made with other creditors in constructing a viable solution.

There are no processing fees or upfront costs for the client to pay and the initial advice from the tax team is given free of charge and with no obligation. Once a payment plan has been agreed the first instalment is taken to cover fees and the set up cost. To offset these costs in many cases the client will not be charged further interest or penalties from HMRC.

This arrangement remains between HMRC and the business. There is no need for credit scoring or any records left with Experian or Equifax. Examples of a couple of clients that have been helped are as follows;

Miss X was struggling to maintain her payment towards her outstanding self assessment tax liability, after the business that she ran from home closed. She was trying to cope paying out over £200 per week towards the debt and additionally worrying over buying food and clothing for herself and her young child.

After speaking to one of tax team, Miss X was assisted with a Time to Pay arrangement with HMRC and simultaneously assisted with her unsecured credit giving her a much more affordable weekly payment.

Mr Y – a self-employed gardener was open to fluctuations in his income with the changing of the seasons. Prior to speaking to the tax team he was trying to cope paying out over £1,200 per month to an outstanding self assessment liability. Owing to the fact that his income fluctuated, Mr Y was having difficulty increasing his income to pay his liability off immediately.

One of the tax team was able to consolidate all his outstanding finance and give him a more affordable monthly payment; this payment was then offered to HMRC and was accepted under a Time to Pay arrangement.

Time to Pay Plans can usually agreed within a matter of days, and can mean the difference between saving a business of the owner/partner/director and the livelihood of their staff.

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