6 Steps To Put Your Client’s Finance Strategy At The Top Of The Agenda
UK businesses have had a rollercoaster of a ride over the last two years. Many survived thanks to committed funders and extensive Government support. One thing is clear: having a solid client finance strategy can make or break a business when times get tough. Phil Chesham explores why financial advisors must encourage clients to prioritise financial planning and what needs to be considered from a funder's perspective when seeking funding.
SMEs remain the backbone of the UK economy. With 5.5 million small businesses making up 99.9% of all companies, supporting 16.3 million jobs and generating £2.3 trillion in turnover, their resilience is essential. When these firms face financial strain, the impact extends well beyond the boardroom — it affects livelihoods and the nation’s economic health.
A long-term client finance strategy is no longer optional. During the pandemic, businesses benefited from measures like loans, business rates relief, and deferred HMRC payments. But now, the focus must shift to growth and recovery. With repayments becoming a reality, many SMEs are facing fresh challenges.
Recent data shows 88% of SMEs received financial support during the pandemic. Of those, 35% worry they won’t be able to repay their debt. Half say recovering from the crisis is still one of their biggest obstacles. These figures highlight the urgent need for strategic planning and ongoing support.
Start with long-term financial planning
It’s time to shift the focus from survival to sustainability. A strong client finance strategy should not only address existing liabilities but also enable businesses to grow and invest with confidence. Access to timely, flexible funding will be critical to success.
1. Understand what the objective is
Having clarity on what your client is trying to achieve not just in the short term but long term. Many businesses have been seeking out cashflow solutions to support survival but as time passes funding will be required to support long term committed repayments and investing for growth. Thinking this through can help secure a robust funding solution from the outset. Establishing clear goals is the foundation of a strong client finance strategy, allowing businesses to align funding with both short and long-term objectives.
2. Do your due diligence
Most businesses want fast access to a funding solution, but the process can be held up because relevant information is not available meaning that the funder does not have full transparency on what is going on in the business from a finance perspective and cannot establish its overall general health. They should at the very least:
▪ Ensure they have at least 2 full sets of management accounts (and possibly longer if their business has been impacted by the pandemic and they want to demonstrate how it performed pre-Covid)
▪ Sell their potential, which is critical so be able to demonstrate past, existing, and future incomes
▪ Be clear on the assets they own – machinery and equipment – and if they are owned or financed
▪ Be upfront about their liabilities and any payment plans in place to cover Government loans or HMRC arrears
▪ Understand their cost base – paying attention to areas that may have reduced during the last two years, but which will be re-established
▪ Revisit their business plans to understand the cost required to make these plans happen
3. Be clear on how much funding your client needs
Having done your due diligence, you and your client will be clearer on what level of funding is required. This helps both the funder but also the business as it helps with forward planning. In uncertain times there can be a tendency to err on the cautious side and to take as little as they need but having a flexible supply of funding to enable them to maximise opportunities as they arise is so important. Putting a funding solution in place that is inadequate means you would need to go through the whole process again which is inefficient use of resources.
4. Choose the right financial solution(s) not just the most common
When determining the right funding solution, businesses can sometimes opt to take the first solution offered by their bank. But this might not be the right solution for their business and what they are trying to achieve. It can be daunting to decide which option is best but the advice that financial advisors give can be invaluable. Your knowledge of what is on offer and what funders are like to work with can ensure a right match for your client.
Outside of the traditional loans and overdrafts that a bank will focus on there is a range of alternative finance solutions that support a business in different ways. Tailoring funding options to business needs is a critical step in building a sustainable client finance strategy that supports growth and stability. As an alternative funder, Time Finance can offer an extensive portfolio of solutions:
Asset Finance – enables the purchase or lease of vital business machinery and equipment to make business happen. We can also offer options which support the refinancing of existing equipment to provide an injection of funds back into the business
Commercial Loans – both unsecured and secured - a flexible source of funds to support current and future plans
Invoice Finance – providing an upfront injection of funds and ongoing cash against invoices as they are raised ensuring the business has improved cashflow to bring plans to life
Vehicle Finance – from a single car to funding your fleet, spreading the cost over time keeps you on the road
5. Choose the right funder
Funders are all different and a client will only understand that after they have started working for them. This is where financial advisors can deliver real value. You have experience of how different funders work with clients. How do they rate in terms of speed, accessibility, flexibility and being easy to do business with? Matching your client to the right funding partner is an important part of the whole process. We are a people business, and we recognise the importance of effective working relationships in helping your clients realise their objectives.
6. Review, Communicate, Adapt
Nothing is certain! Things will change. Make sure you have regular review sessions to understand where the business is, how their funding solutions are working form them and what if anything needs to change. Make sure you continue communicating with the funder – by keeping them in the loop and avoiding any surprises makes for a smooth and beneficial relationship. By reviewing progress, maintaining open communication and adapting financial plans, advisors can ensure a client finance strategy stays relevant and effective.