News in brief: Brexit, lending, alternative finance, HR, technology

The pound drops to seven-year low
The pound drops to seven-year low

EU referendum politics rock the pound to seven-year low

The pound has reportedly hit its lowest level against the dollar in nearly seven years, following London Mayor Boris Johnson’s announcement he is supporting the leave campaign in the upcoming Brexit referendum.

According to the BBC, as one stage the pound hit its lowest level since March 2009 before later bouncing back slightly.

A survey of 1,000 senior decision makers at SMEs by World First found that:

• 75% fear that currency volatility from the EU referendum will impact their business

• Alarmingly however, almost half (47%) are failing to take any notice of foreign exchange markets

• This is despite 45% admitting they have been caught out by a sudden movement in exchange rates and 26% having been severely impacted by market volatility in the last 12 months

World First chief economist Jeremy Cook said: “Do I think that Boris Johnson’s decision to go one way or the other is worth a 2 cent move in GBPUSD? Absolutely not, but traders and investors have been waiting for an opportunity to give sterling a smack and the Mayor of London has handed them a big old bat with which to do it. At the beginning of a year we warned that the campaign into the vote would be pockmarked by some deep falls in sterling. Fundamentals remain strong here in the UK, but politics can always outweigh fundamentals.”

Banks are closed during peak lending hours for SMEs

More than two in five (42%) SMEs are applying for growth funding outside office hours when banks and retail lenders are closed, and in fact almost one in ten (8%) are night owls applying for finance after 9pm during the working week.

At a time when traditional lenders have been pressured by The Government and trade bodies to liberalise their lending policies to the country’s small business community, the new data from Funding Xchange raises a fundamentally new issue – most retail lenders are not open for business when a large proportion of small businesses choose to address their funding requirements.

  • Early birds: 7% submitted a funding application before or at 9am, ensuring the day ahead was clear to deal with customers.
  • Office hours: 35% of applications were made between 9am and 1pm and a further 24% between 1pm and 5pm
  • Watershed lending: More than one in five (22%) turned attention to funding applications between 5-9pm
  • Night owls: A further 8% actioned lending requirements between 9pm and midnight.

SMEs must provide better working environments

The design of a workplace is important to 85% of British workers, with 54% believing that an office environment has a direct impact on workplace culture.

The Leesman Index found that only 54% of respondents agree the design of their workplace enables them to work productively. By understanding how the business environment affects employee performance, workplace productivity can be enhanced.

In addition, the Leesman data also shows employees are increasingly looking for a variety of workspaces, including social, informal areas to collaborate and communicate with colleagues, yet their employers are failing to provide them.

Micro businesses must embrace technology to improve productivity

Small and micro business owners want to be more productive but severely lack the awareness of how technology can help them achieve this goal.

An online study of 1057 decision makers of businesses with 1 or 2 employees, commissioned by 123-reg and undertaken by YouGov, found that when it comes to online awareness, small business owners surveyed understand the importance of a website and the benefits it can bring to business growth, proven by the fact that 64% of respondents set up their website more than three years ago. However, SMBs fall down when it comes to linking their day-to-day processes and their online presence, showing a failure to use technology to help save them time.

An overwhelming 63% of small business owners would like to increase their company’s productivity but only a third (33%) of these had a plan in place to do so. A key reason for this low percentage seems to be a majority of SMB’s used Microsoft Office products (82%) - many were unaware of how to get the most time saving benefits from these tools.

Alternative finance industry shows significant growth

The alternative finance industry has grown by 84% to £3.2bn over the last year, largely due to increased awareness among SMEs of their financing options.

Commenting on the findings from the report by Cambridge Centre for Alternative Finance and the innovation foundation Nesta, IGF Invoice Finance MD Tracy Ewen said that it shows a “confidence in borrowing” among small businesses.

Ewen said: “With approximately 20,000 SMEs raising alternative funds through online channels alone in the last year, it is clear that small businesses have an appetite and better understanding of the variety of finance options available to them, such as invoice finance and peer-to-peer lending. The market for alternative business lending may still be small at 3.43%, but it is growing year on year as demand increases.”

According to Ewen, businesses that want to pursue this route must remain astute when sourcing their funding options, however, and utilise the wealth of free advice available to them. Evidence has shown that one in three SMEs resorts to social media or Google for financial guidance, which is not thorough enough.