Demystifying asset-based lending
Ian Flaxman, managing director, working capital solutions at Wyelands Bank | 16:57 Wednesday 2nd January 2019
Do you know the difference between ‘approved payables finance’, ‘reverse factoring’, ‘vendor pre-pay’ and ‘contract monetisation financing’.
Those of you that spotted that this is a trick question are correct. These expressions all mean the same thing, although it may not be immediately clear what that is.
One of the challenges in financial services – as in many professions – is the use of jargon. Used well, technical terminology can – for instance – help doctors understand subtle differences between different conditions, and those differences will be critical in how the patient is treated.
Used badly, jargon can simply confuse and create barriers with customers, which can put them at a disadvantage. The use of jargon can make it harder for customers to understand what they are looking for or buying. That can make it difficult for them to know if they are getting good value or even the right solution.
Our own research of 37 financial services providers of working capital solutions shows that companies use nearly 30 different terms for just three financial products.
Receivables finance has the highest number of synonyms used with 21 different names. Meanwhile, trade finance has five different names. Inventory finance is the least confusing product and is given just one other name.
These relatively simple concepts do not need so much jargon around them. Jargon is confusing. It does not differentiate through innovation, but through confusion.
We believe the industry should apply the same definitions around each of the core products, doing more to help customers understand.
Here is what Wyelands Bank would like to see under the umbrella term asset-based lending and the synonyms used by companies researched:
As can be seen, many of the terms used are slight variations of a core product or labelled to appeal to a particular sector.
But few customers have the time or expertise to pore over the subtle distinctions between seemingly similar services. Rarely are they experts in the finance industry and nor should they have to be.
Making it easy for firms to raise funds to trade, grow and create jobs goes to the heart of the productivity debate in the UK. Anything that gets in the way can be detrimental to those firms and to the UK economy.
At Wyelands Bank, because we are new, we have been able to do this from the outset. We get to know our customer’s business and understand what they need. We don’t simply offer off-the-shelf products.
We help our customers meet their business challenges by understanding their range of assets and finding the right solution to suit them and we do it without the jargon.
SIGN UP TO OUR NEWSLETTER TO RECEIVE MORE NEWS LIKE THIS STORY
British Business Bank UK Network aims to improve funding awareness across UK
The British Business Bank UK Network will help to improve awareness of funding options across the UK by directly approaching business finance professionals...
Building with confidence in challenging times
It is difficult to think of a time in the past three decades when the chasm between the interests of UK business and the Palace of Westminster has been more exposed than the Brexit debacle...
Real Property Finance passes £100m in deals with Cambridge & Counties Bank
Cambridge & Counties Bank has provided more than £100m of loans for the clients of Real Property Finance (RPF)...
Metro Bank reports 48% increase in lending
Metro Bank has reported that its lending increased by 48% in 2018 compared with 2017...
Metro Bank appoints Luke Lloyd-Davies to advisory board
Metro Bank has appointed Luke Lloyd-Davies to its advisory board...
OakNorth: how some of the entrepreneurs we’ve lent to first got started
For many, the new year brings with it new possibilities and the chance to explore new opportunities...
Hanley Economic BS to push self-build offering
Hanley Economic Building Society is set to commence an extensive 2019 self-build campaign as it aims to engage with growing numbers of self-builders...
NatWest offers Esme Loans directly to its SME customers
NatWest will now offer Esme Loans products directly to its existing SME customers...
OSB appoints new NED
OneSavings Bank has announced that it has appointed Sarah Hedger as a non-executive director, with effect from 1st February...
Tandem Bank reaches 500,000 customers
Tandem has announced that it has reached 500,000 customers one year on from being granted a full banking licence...
Bank Leumi UK appoints new head
Bank Leumi (UK) has appointed Sarah Ryman (pictured above) as its new head of premier banking and liabilities...