The number and range of tools that SMEs can use to grow, innovate and engage with customers is unprecedented, with technology breaking down barriers to entry, automation driving efficiency, social media opening a new frontier of marketing and fintech platforms making access to new sources of finance easier and faster.
But alongside this, they need to develop new products and services to remain competitive, to recruit the right people to underpin their growth while finding smart partners; they need to maintain control of costs as well as staying up to date with the latest technology, not to mention securing the right type of finance to stay afloat and grow further. And they must do all this in a flat economy.
The panel at a recent FRENNS/WeWork event in Central London aimed to make sense of the challenges facing SMEs, and to give some perspective on how small businesses can harness technology to help drive growth.
Peter Simons, a former banker at The Bank of Ireland, and now Development and Innovation specialist at CIMA, explained that alongside the effects of globalisation the factors keeping the owners of small businesses awake at night centre mainly on harnessing technology to ensure they stay competitive.
“In addition, they’re concerned about their access to finance so they can grow,” he said. “But in many cases a lack of management time and expertise is a real problem.”
“And while SME owners can access traditional accounting services, developing a better understanding of what’s happening and how digital technologies are impacting your business models and what it might mean for your competitors, is more of a challenge.”
Anx Patel, founder and CEO of GoKart, an innovative online platform designed to help London restaurants control costs by delivering fresh food and drink direct to their door, agreed that the key concern in ensuring fast access to affordable sources of finance that can adapt to business needs as they change. “We’re living in the YouTube world where we expect everything now,” he said. “So waiting 60 days just doesn’t seem okay anymore. In our business and it’s all about cashflow that’s how we’re getting the cheaper prices from suppliers.”
Helping SMEs maintain healthy cashflows is central to FRENNS offering, which founder Per Frennbro explained involves matching SMEs’ invoices – which are insured before being financed – with investors keen to drive returns by buying them.
By instantly analysing the credit scores and other metrics, FRENNS helps business owners to get paid quicker, and at the same time reclaiming the time they need to grow their company. Using FRENNS as an everyday working capital tool also helps recalibrate the SME-accountant relationship, moving from simple bookkeepers to strategic advisers.
“The algorithm immediately lets us see what your cash needs are, when your customers are likely to pay, and what level of finance we can arrange through discounting your invoices,” Frennbro said, pointing out that in addition to faster access to affordable finance, as FRENNS develops it will also begin to deliver predictive information to help SMEs forecast cashflows more accurately.
“You could have the buyers not paid on time and so on, there are other buyers in the same area who are better payers, so we can present a different view of what companies are doing. And you can actually recommend these companies based on the numbers we present.”
For panelist Rob Rattray, one of a new breed of accountants, driven more by the desire to help shape long term strategy than simply billing for vanilla client work, the possibilities that platforms like FRENNS offers are potentially enormous.
“What I try to do when I meet these businesses is to educate them on how to fund their business to help them get to next stage. You need to get the right long term capital in place whether it’s debt or equity.
“I think it’s a really useful tool in balance with other sources of funding and finance. If your revenues for whatever reason don’t continue that growth rate or decline you can actually end up with a cashflow squeeze if you’re over reliant on one form of finance.”
The FRENNS highlighted the growing sense among SMEs, technology companies and accountants that we’re currently in a period of transition. Traditional business services – bank finance, accountants doing the books, SMEs relying entirely on external advice – are being phased out.
“Small businesses need good advice more than ever, and they’re much more adept at running much of their own technology,” Peter Simons concluded. “The challenge here is that if accountants aren’t doing something which the machine can do they’re in trouble in the long run, and so they need to embrace new technology in order to stay relevant.”
Frennbro believes that by aligning SMEs with the right advisers who are able to use the smartest technology offers the way forward. “We’re clear that the platform serves not only small business in need of affordable finance but also accountants that need to offer a broader range of technology to serve their clients. It’s a really exciting time”
Find out more how FRENNS can help your business gain the competitive edge at www.frenns.com
About the Author: Per Frennbro is the CEO of FRENNS, which offers high speed, low cost invoice financing for small businesses. As a serial entrepreneur, Per focuses on helping both small and medium sized businesses take control of their cash flow. Visit https://www.frenns.com and see how you can turn your invoices into working capital to help your business prosper.