Thank you to Ultimate Construction Finance Managing Director Martin Bennison for taking time out of his busy schedule to grant us an interview about his company’s new business finance product offering for the construction sector.
The first quarter of 2013 has seen a slow start for the invoice finance and ABL sector in general. How do you feel the rest of the year will pan out, and what expectations does Ultimate Finance have for the year?
Martin Bennison: We have certainly seen an increase in enquiries in quarter two, as compared with the first quarter this year, which bodes well and will hopefully continue throughout the rest of this year. I expect this is due to a number of factors including the downgraded credit rating in February, and businesses feeling anxious ahead of the UK budget announcement.
What has been really noticeable is that businesses are still particularly apprehensive about the economic climate, and wary of making any quick decisions. One of the biggest issues for businesses is uncertainty, so most directors we’ve spoken with are keen to take their time before deciding upon a course of action.
You recently launched a new construction finance product. What was the reason behind launching it, and how is the product performing?
Martin Bennison: I’m really pleased with what we’ve achieved since launching Ultimate Construction Finance in January. We’ve worked hard to develop an approach to funding first tier sub-contractors in the construction arena that we believe to be refreshing, innovative and exciting. We’ve concentrated our efforts in utilising our team’s skill in structuring facilities correctly, and recruited those with the relevant knowledge of the construction industry.
We launched it as a direct response to a need within the industry. We are seeing payment terms from many main contractors creeping up and this is putting additional pressure on sub-contractors. The response has been tremendous, we’ve had interest from all manner of potential clients – both small operators, as well as clients recording turnover of up to £20 million.
Construction finance could be viewed as a high-risk product. Is this perception correct and if so how do you mitigate the increased risk?
Martin Bennison: The reality is that construction finance is a high-risk product if you’re not familiar with the vagaries of the industry, and the issues held within the contracts under which most contractors operate. We invested a lot of time and industry expertise in structuring deals correctly so as to deliver the level of funding promised at the cost quoted whilst also being mindful of the potential risks associated with this sector.
Funds are released against uncertified applications for payment on a confidential basis and we have enlisted the support of a highly experienced firm of quantity surveyors to work alongside us.
Do you think that the independent financiers will have to launch more specialised products to compete with the mainline financiers, or is there enough business in the market for all providers to rely on their core factoring and invoice discounting products?
Martin Bennison: Yes I do. This year we have launched a series of specialist products including those designed specifically for the construction, haulage, overseas trade and recruitment industries. These facilities are administered by client managers who have a wealth of experience structuring deals for companies in these sectors.
Our core market will always sit within the invoice discounting and factoring arena, but more and more customers are coming to us to discuss how these products can be framed with more bespoke additions such as the VOSA O Licence compliance product that we offer to hauliers.
There have been a number of new entrants to the market, providing services such as selective factoring and online invoice auctions. How do you think these new providers will affect the small independent factoring companies?
Martin Bennison: There has been a lot of change within the industry over the last twelve months with new entrants emerging, and the bottom line is that the more choice businesses have available to them, the better. ABL funding packages offer a very competitive alternative to traditional bank lending, and I see the widening of the market as an opportunity for independent financiers to take advantage of a surge in demand for alternative funding solutions. We all simply have to continue evolving and be innovative.
There has been talk about the Invoice Finance sector needing to be regulated. Do you think this needs to happen? Or will this adversely affect the ability of the invoice financiers to do business?
Martin Bennison: Greater self-regulation and standard industry guidelines are exactly what funders need in order to ensure that SME’s best interests are served; whilst ensuring that ethical financiers can continue to compete within a busy market.
We welcome the ABFA’s input, and hope that the guidelines will go some way towards helping to reduce the number of healthy businesses affected by hidden charges.
We have funds available and are willing to lend to help see SMEs through the economic challenges they are facing. We’re determined to do that in a way that promotes transparency and clarity with regards to our fee structure.
About Martin Bennison: Martin is Managing Director of Ultimate Construction Finance Ltd, which is part of Ultimate Finance Group PLC, a leading provider of financial solutions to SMEs across the UK. Martin has more than 26 years’ experience in the banking and corporate finance sector. He spent ten years at Lloyds Bank Commercial Business Centre where he gained his banking qualifications before moving into regional sales with Credit Lyonnais, Docklands, for a further five years. Following over ten years with Bibby Financial Services where he was quickly promoted to Director at Bibby Invoice Discounting Ltd, Bennison joined Ultimate Finance in 2011. This year, Martin assumed responsibility for launching Ultimate Construction Finance Ltd, Ultimate Finance Group’s newest funding product.
Author: Simon Belton: Simon has worked in all areas of the invoice finance sector. He is experienced in business development, risk and client relationship management.
Get in touch for details about Simon’s invoice finance training and consultancy services.
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