www.wealthandfinance-news.com Q2 2024&wealth finance i n t e r n a t i o n a l
Welcome to the Q2 edition of Wealth & Finance International magazine. As always, with every issue, we endeavour to provide fund managers, alongside institutional and private investors with the very latest industry news in the traditional and alternative investment spheres. As 2024 unfolds, the finance sector continues to grapple with drastic shifts driven by digitalisation, AI, and the global economy. From AI enabling enhanced cybersecurity solutions, to how gen-z are influencing the global economy, to protecting data in the world of remote work. There is a lot to keep abreast with in the world of finance and we are here to help you keep up to speed. In this issue, Beechbrook Capital partners with British Investments, LifeSearch announces a partnership with Trinity, and Big Issue Group is supporting people to work and earn during the UK poverty crisis. We also feature a retirement planning advisory from Thailand, and a corporate, fund, and trust software solutions provider from the USA – both extraordinary, award-winning organisations that are raising the bar within the industry. We hope you find this issue to be insightful and also wish you a prosperous quarter ahead! In the meantime, we look forward to welcoming you back again soon for our Q3 issue. Rebecca Scotland, Editor AI Global Media, Ltd. (AI) takes reasonable measures to ensure the quality of the information on this web site. However, AI will not assume any legal liability or responsibility for the accuracy, correctness or completeness of any information that is available through this web site. If errors are brought to our attention, we will try to correct them. The information available through the website and our partner publications is for your general information and use and is not intended to address any particular finance or investment requirements. In particular, the information does not constitute any form of advice or recommendation by us or any of our partner publications and is not intended to be relied upon by users in making or refraining from making any investment or financial decisions. Appropriate independent advice should be obtained before making any such decision. Any arrangement made between you and any third party named in the site is at your sole risk and responsibility. Editor’s Comment Editorial Team Sofi Parry, Senior Editor | Rebecca Scotland, Editor Emily Godbold, Writer | Joshua Beardsmore, Writer | Matthew Wright, Writer Design Team Lauren Baldwin, Graphic Designer Haeri Jung, Junior Graphic Designer
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Contents 6. News: Beechbrook Capital partners with British Business Investments for new £20m SMA LifeSearch announces partnership with Armed Forces specialist insurer Trinity 8. Business Class Asia: Retirement Planning Advisory Firm of the Year 2024 - Thailand 10. TrustQuay: Best Corporate, Fund & Trust Software Solutions Supplier 2023 - USA 11. Big Issue Group supporting 10% more people to earn and work as UK poverty crisis deepens 12. British Business Investments announces a £50m private credit co-investment vehicle with DunPort Capital Management 13. Simply Asset Finance announces FY 2023 pre-tax profit of £5.5m 14. Corporate cost-cutting at a four-year high despite growing economic optimism
NEWS Beechbrook Capital partners with British Business Investments for new £20m SMA British Business Investments Ltd has increased its commitment to Beechbrook Capital LLP (“Beechbrook”) with a new £20 million separately managed account (“SMA”). British Business Investments, a wholly owned commercial subsidiary of the British Business Bank, aims to improve access to alternative finance for smaller businesses across the UK, while supporting the transition to a net zero economy. Since it was established in 2014, British Business Investments has committed more than £3.8 billion to providers of finance to UK smaller businesses. The SMA will co-invest alongside Beechbrook’s existing, and future, UK-focused funds. The funds support small and medium-sized businesses with turnover of between £10m and £100m, and an EBITDA of £1m and above. They provide predominantly senior secured loans to private, non-sponsored companies to support acquisitions, buy-outs, shareholder re-alignments, re-financings, and general expansion plans. Beechbrook has built a longstanding partnership with British Business Investments; it is the sixth fund managed by Beechbrook that British Business Investments has invested in. The additional commitment comes as the two firms celebrate their 10th year of working together, with the team at British Business Investments having initially invested with Beechbrook in 2014. Leveraging British Business Investments’ support, Beechbrook continues to provide essential financial capital to the underserved smaller business segment of the lower mid-market. Since 2008, Beechbrook has invested more than £0.5bn in 70 companies across the UK. Beechbrook currently maintains a local presence in four major UK cities: London, Manchester, Birmingham and Leeds, and is considering other locations for expansion. These strategic locations allow Beechbrook to develop regional relationships, to gain an edge in origination and to understand better the needs of local businesses. Beechbrook is currently investing the third fund in the strategy and has recently completed its ninth transaction in Give Me Cosmetics, based in Liverpool, and its tenth in Embrace Steel Group which has operations in North Yorkshire and South Wales. These transactions are a testament to Beechbrook’s expertise, regional focus and local presence. Paul Shea, Managing Partner, Beechbrook, said: “We are delighted to advance our relationship with British Business Investments through the provision of this tailored managed account. We are committed to investing in the UK lower mid-market, supporting growth, jobs and the Levelling Up agenda. We have a busy pipeline and are looking forward to supporting more high quality management teams to achieve their strategic goals.” Adam Kelly, Managing Director, British Business Investments, said: “We are excited to continue our support for Beechbrook with a new £20m SMA as they provide essential capital to the UK lower midmarket. This commitment to Beechbrook will further support UK smaller businesses with the finance they need to grow. British Business Investments has previously backed Beechbrook’s earlier SME Credit funds with commitments in 2017, 2019 and 2021, and we are pleased to continue our partnership.”
NEWS LifeSearch announces partnership with Armed Forces specialist insurer Trinity LifeSearch, the independent UK protection advice specialist, has announced a partnership with specialist military insurer Trinity, to provide a range of tailored family protection products for veterans. Since 2000, Trinity has provided specialist insurance products for military personnel, veterans, and their families. The portfolio including personal accident cover, kit, contents and personal possessions insurance, military life insurance and military travel insurance is available online, over the phone, or face to face. The new partnership with LifeSearch focuses on offering veterans* (not serving members) life protection, critical illness cover, and income protection. Run by ex-military execs, and with a team of around 25 people, Trinity places real emphasis on talking with and understanding the needs of current and former members of the armed forces - a market which is traditionally underserved by the mainstream insurance market. Trinity has assembled a panel of specialist/expert referral partners/underwriters to provide a full portfolio of affordable military kit, building & contents, personal accident, life (serving), and now protection products, to give customers access to the cover they need. Under the new partnership, members of Trinity’s growing community of veterans can access background information on the cover and support available through a dedicated website area, plus a programme of more targeted awareness and education content over coming months. A team of specially trained LifeSearch advisers will be on hand to help find the cover veterans need from their extensive range of household-name and specialist insurers, together with personal support to ensure they are protected properly. Ed Axon, LifeSearch Chief Growth Officer, comments: “The work that our Armed Services personnel do, and the burden placed on their families, means that they need and deserve exemplary advice and protection. Sadly, all too often, their life experience can make finding affordable insurance options an uphill struggle “So, I’m incredibly proud that the Trinity team trusts LifeSearch to work with them to ensure our veterans get the peace of mind they deserve. Our team prides itself on its expertise, innovation and personal approach. We look forward to creating a lasting partnership with Trinity and its armed service community.” Mark Austin, Trinity CEO, comments: “We are hugely proud of the work we do, and the reputation that we have built up within the UK armed forces community. Central to this success is demonstrating our understanding of the challenges armed services personnel face, and the worries they and their families face.We are committed to supporting and protecting under-protected members of the armed forces community with a full range of family protection, and this partnership with LifeSearch is an unambiguous demonstration of that ambition. “It’s essential that our customers have the peace of mind that they are dealing with a competent organisation who has made all the necessary arrangements to look after their interests and LifeSearch was the standout choice to support us in this partnership. With unparalleled protection expertise, independence, and commitment to human-first customer engagement. I’m excited about the partnership, what the future holds, and the positive impact it’s going to have on current and future members of the Trinity community.”
8 | Wealth & Finance Q2 2024 Retirement Planning Advisory Firm of the Year 2024 - Thailand Founded in 2007, Business Class Asia is the leading Retirement Planning Advisory Firm in Thailand, with wealth management expert Paul Dickinson at its helm. The company’s primary focus lies in international retirement planning, estate and asset protection, international and local property sales, and unique trust options. Business Class Asia is a vital component of the wider Business Class Group, which operates 13 brands across Asia and Europe, offering financial planning services. Over almost two decades of operation, the company has expanded and developed its expertise services to suit a wide range of clients. The primary clients that Business Class Asia caters to includes the expatriate community in Thailand and Thai overseas investors, looking for Retirement and Property Protection Planning. The company’s mission is to grow and protect its clients’ wealth and assets for future generations to come. This can be particularly reassuring for clients additionally navigating the uncertain world of relocation alongside their retirement. “Transparency, security, and choice.” Business Class Asia is highly positioned in the market through its utilization of unique, bestselling Retirement Solutions of the Soteria Trusts and Hestia Trusts. For example, the company is the sole distributor of the Soteria Trusts in Thailand, a company with a revolutionary offering on the market. One of Soteria Trusts solutions is often referred to as Property Pension and is aimed at clients with UK-sited assets that can be shielded from the UK and Thai taxation systems. The Soteria Trusts has been created to support retirement savings and enable the client to live a financially secure life pending retirement, including passing on remaining estate to beneficiaries’ tax free, which removes a common additional stress when arranging pensions. Choosing the Soteria Trusts Property Pension comes with the benefits of the trust being 100% Creditor Protected, which offers a multi-generation legacy planning. It is also free from capital gains, dividends, and inheritance tax, and offers lower rates of income tax. What’s more, Business Class Asia’s second bestselling service is Hestia Trusts, a trust-based platform that offers access to fixed-income opportunities usually reserved only for high capital clients. The trust’s structure is in Hong Kong and makes Hestia Trusts incredibly tax- efficient so that a higher portion of the returns remain with the client. With annual returns of up to 16% and no capital gains tax, Hestia Trusts is the ideal retirement solution for those with an initial £50,000 lump sum and an interest in growing their wealth. “ We believe in the importance of knowledge.” Business Class Asia has a client-forward approach in its business, and trains employees to prioritise the client with each decision. When asked about client service, Paul says, “We recognise that prioritising out clients is the cornerstone of fostering sustainable, mutually beneficial relationships.” The company understands that trust is paramount in this industry and takes due consideration in explaining each solution to clients in an honest and comprehensive manner. In addition, the company advisors are reachable to clients via phone, email, and other online communications and are always on hand to explain and help. This fosters a relationship in which the client can feel reassured and trusting in the company. “Ensuring that our clients understand their options and have the chance to meet us in person before discussing any services is key to building trust,” says Paul. Apr24383 Business Class Asia is Southeast Asia’s foremost Wealth Planning Specialist, with the mission to grow and protect its clients’ wealth and assets through streamlined pension management services. We speak to Regional Manager Paul Dickinson as the company wins its title in the Retirement Planning Awards 2024.
Retirement Planning Advisory Firm of the Year 2024 - Thailand The expert team at Business Class Asia have a deep understanding of the local and international taxation systems and are continuously developing this understanding. The market is a constantly evolving landscape, and it is imperative that the company remains ahead of the trends. Paul tells us, “The key to maintaining our competitive edge lies in our commitment to continuous learning and professional growth. Our team participates actively and regularly in workshops, webinars, and industry-specific conference, as well as subscribe to industry media outlets.” These internal events are in addition to the online and in-person events that Business Class Asia offers its clients. The company provides Q&A sessions, as well as updates on the latest regulatory changes and solutions on the market. Business Class Asia ensures that its portfolio of partnerships remains diverse and allows for the most up-to-date services for its clientele. This was especially true for the company’s response to the recent income tax update of 2024 in Thailand. For many of its clients, the complexities posed for challenges in navigating the transition, and many clients reached out to Business Class Asia for guidance. The company quickly responded by hosting an in-person event in Bangkok and creating a dedicated landing page for clients. Paul reflects, “Our ability to react swiftly and provide immediate, strategic advice on how to optimally structure their financial matters – particularly concerning retirement incomes potentially at risk – stands as a testament to our commitment to client service excellence.” Following such previous success, the future of Business Class Asia promises to be fruitful for both the company and its clientele. The company looks forward to a pipeline of various events occurring both online and in-person for clients to gain a better understanding of retirement planning solutions and the income tax update. In addition to this, the company co- hosts an online Soteria Trusts event on the third Thursday of every month that gives more insight into the popular property pension. In the wake of the Thai income tax update, the company will also be visiting various locations across Thailand to educate the community. If you would like to read about the variety of events hosted by Business Class Asia, visit the company’s event page for more information. Contact: Paul Dickinson Company: Business Class Asia Web Address: www.businessclassasia.com
10 | Wealth & Finance Q2 2024 Best Corporate, Fund & Trust Software Solutions Supplier 2023 - USA TrustQuay has over 30 years’ experience in meeting the specific technology needs of the Trust, Private Client, Corporate Services, and Fund Administration sectors. In May 2023, TrustQuay merged with Viewpoint to become a global industry champion for service providers in the sector. With more than 660 customers across Europe and Asia, TrustQuay Viewpoint offers a comprehensive range of solutions for entity management, client accounting, regulatory compliance, digital end-client engagement, and practice management. Its professional team offers 24/7 support to 36,000 operational users across 80+ jurisdictions. Merging TrustQuay and Viewpoint has enabled the group to deliver more product innovation, scale up its services, customer support and business development, and expedite growth across its product areas. Customers have already benefited from the business’s advanced capabilities, wider coverage of regulatory environments, and improved global customer service. Since 2020, TrustQuay Viewpoint has conducted an annual global survey of private banks, family offices, corporate services providers, and wealth managers to examine their hopes and concerns about the industry’s future. The surveys revealed that while the industry recognises the need to embrace digitalisation, companies are struggling to begin the process. When asked to compare the sector to other areas of financial services, 81% of respondents believe that technological innovation in the industry must accelerate and 84% believe firms must digitise their business models to remain competitive. In response to the current low levels of digitalisation within the trust and corporate services sector, TrustQuay Viewpoint launched TrustQuay Online, the first complete end-to-end cloud-native SaaS platform. The innovative platform provides all firms with the benefits of digitalisation, enabling them to meet their clients’ regulatory requirements and streamline their operations. Available 24/7 and multi-platform compatible, TrustQuay Online is free to use and aims to help firms reduce complexity and risks as well as futureproof their technology. With the platform’s support, clients can focus on automation, client management, and leveraging this new SaaS solution to increase margin and foster growth. TrustQuay Viewpoint has invested heavily in its Professional Services team which delivers project implementations and transformation programmes to customers all over the world. The team focuses on the post-sales process and the delivery of digital wealth management solutions to help them embrace digitalisation and achieve their full potential. Many customers are adopting new technology for the first time and require support to move away from legacy systems to a common digital or regulatory platform. As an experienced partner, TrustQuay Viewpoint strives to help firms acquire value from its software, unlocking opportunities to develop and evolve the trust and corporate services sector. The Professional Services team works with customers to ensure that their TrustQuay Viewpoint software is fully implemented at every stage. TrustQuay Viewpoint’s latest survey has revealed that the sector is still encountering problems with data quality, increasing efficiencies, reducing costs, and regulatory burden. Although progress is happening, technology investment is still trailing behind, and over the coming years, firms need to prioritise data quality to ensure their records are accurate and up to date. Imprecise data creates issues for companies in terms of regulatory and client reporting and prevents widespread digitalisation. Technology providers such as TrustQuay Viewpoint play a vital role in conversations about data, working with clients to help them achieve their goals. In 2022, the company launched a Digitalisation Pathway to assist firms in implementing best practice and embracing transformation. The pathway is designed to help clients unlock value with improved profitability and increased organic growth. In an area of low levels of digitalisation, TrustQuay Viewpoint has become firms’ trusted partner with its innovative technology set to revolutionise the trust and corporate services sector. The Professional Services team works diligently to deliver project implementations and transformation programmes to customers globally through a wide range of pioneering products. Recognised in this year’s Fund Awards, TrustQuay Viewpoint is passionate about democratising technology and helping companies digitalise with the launch of its end-to-end SaaS platform, TrustQuay Online. We cannot wait to see how TrustQuay Viewpoint will continue to modernise the sector with its suite of highquality software solutions. Contact: Paul White Company: TrustQuay Web Address: www.trustquay.com TrustQuay Viewpoint is a globally recognised provider of Trust, Corporate Service, and Fund Administration systems. With its scalable and secure platform, the company helps clients to leverage the power of technology to improve efficiency, reduce costs, and generate new revenue opportunities. For its commitment to innovation and continuous evolution, we have honoured TrustQuay Viewpoint with our Fund Award for Best Corporate, Fund & Trust Software Solutions Supplier – USA.
May22030 Big Issue Group supporting 10% more people to earn and work as UK poverty crisis deepens • With 1 in 5 Britons now living in poverty, more people are turning to the trusted social enterprise • Nearly 4,000 individuals have been given access to income generating opportunities and employment through the Group’s innovative and varied services – a 10% increase on 2022 • The online reach of the Big Issue’s award-winning journalism has grown by 57% in 2023, with 7.9 million unique users consuming its trail-blazing news and advice Big Issue Group’s 2023 Impact Report, published Monday 13 May, shows a stark rise in reach, support and engagement in its services as the impact of the ongoing poverty crisis solidifies, leaving millions of Britons trapped in poverty. The report shows that the Big Issue Group has made major strides towards its ambitious goal of engaging 11 million people by the end of 2026, with number of people reached and impacted by its work rising to 9.6 million in 2023 – a 24% increase on the previous year. It’s set against the backdrop of a stark rise in UK poverty that’s left more people needing support as they grapple with ever-escalating mortgages, rent costs, energy bills and food prices[1]. As one of the country’s leading social enterprises and B-corps, the Big Issue Group has spent the past three decades developing innovative services that change lives through enterprise. More than 1 in 5 people are now in poverty in the UK and 3.8 million people are reportedly living in destitution in 2022, including around one million children[2]. This is almost two-anda-half times the number of people in 2017. Selling the Big Issue remains one enterprising solution for people facing poverty to generate an income. 913 people sold the magazine for the first time in 2023, and £4 million was collectively earned by vendors across the UK, an 8% increase on 2022. The need for trusted news and advice on social issues has never been greater. In 2023, 7.9 million unique users sought out Big Issue exclusives on issues impacting people feeling the bite of the cost-of-living crisis, from energy price fluctuations to universal credit changes. This has resulted in a remarkable 57% increase from last year in traffic to Big Issue’s awardwinning online journalism. The Group’s social investment arm, Big Issue Invest, has improved the lives of 1.5 million people through the 140 purposedriven organisations they’ve invested in. It backs passionate social entrepreneurs to deliver projects that work for their communities, with around £45 million of assets under our management in 2023, a 20% growth on last year. 229 individuals were supported on their journey to employment through our personcentred recruitment service Big Issue Recruit. Dedicated to finding sustainable employment for people who face barriers to finding work, such as people struggling with their mental health, Recruit has ultimately placed 85 people into new job opportunities. Paul Cheal, CEO of the Big Issue Group, said: “Our enterprising solutions to support people in poverty, be it direct or through our work with other organisations, are making a real difference to people’s lives. Whether though our work with vendors, our social investments, our person-centred recruitment service, or the impact of our campaigning, we’re determined to unlock social and economic opportunities that help millions endure the poverty crisis the UK is currently facing. “We’d like to thank those who have supported us, be it readers, partners or investors. This report demonstrates that our work is needed more than ever.”
12 | Wealth & Finance Q2 2024 British Business Investments announces a £50m private credit co-investment vehicle with DunPort Capital Management British Business Investments today announces a £50m commitment with DunPort Capital Management (“DunPort”), to create a co-investment vehicle, Alder Corporate Credit DAC (“Alder”). The investment vehicle will provide smaller businesses with a turnover of less than £100m with flexible debt capital solutions, that are wholly or predominantly based, headquartered, or operating in the UK. British Business Investments Ltd, a wholly owned commercial subsidiary of the British Business Bank, aims to improve access to alternative finance for smaller businesses across the whole of the UK, while supporting the UK’s transition to a net zero economy. Since it was established in 2014, British Business Investments has committed more than £3.8 billion to providers of finance to UK smaller businesses. The Alder vehicle will co-invest alongside Oak Corporate Credit DAC, launched in 2021 and backed by the Ireland Strategic Investment Fund, the European Investment Fund and a number of other institutional investors to support smaller firms. Adam Kelly, Managing Director, British Business Investments said: “At British Business Investments, our mission is to improve access to alternative finance for smaller businesses across the whole of the UK. This £50m commitment to DunPort will support UK businesses with the flexible debt solutions they require to develop their growth strategies. We are delighted to partner with DunPort.” Pat Walsh, Executive Director of DunPort said: “The UK is a strategic market for DunPort and one in which we are continuing to experience strong and sustained demand from a wide range of sponsors, advisors, and business owners generally for flexible debt solutions The launch of Alder now increases our capacity to support small and medium sized companies across the UK. Furthermore, the addition of British Business Investments to our investor base is an important validation for DunPort as we continue to enhance our position as a leading alternative debt capital provider in the UK and our other core markets of Ireland and the Benelux region.” Feb22158
13 | Wealth & Finance Q2 2024 May22030 Simply Asset Finance announces FY 2023 pre-tax profit of £5.5m • 2023 sees the company reach revenues of £52.3 million, increasing its loan book to £480 million • Loan origination to date climbs to £1.3 billion, as it supports over 7,400 SMEs across the UK • Named in the FT1000’s list of Europe’s fastest-growing financial services businesses for the third year running Simply Asset Finance, the specialist business lending provider, has announced FY2023 profits of £5.5 million and revenues in excess of £52 million. As the business further expanded to support its small- to medium-sized business customers across the UK, its loan origination also grew to £1.3 billion to date. Founded in 2017 by a team of asset finance specialists in response to the overly-complicated SME financing process, Simply Asset Finance is streamlining access to finance for UK SMEs. Through its market-leading technology and a dedicated team of experts, it delivers a digital path to finance for small and medium sized businesses across the UK - looking beyond the balance sheet to empower SMEs to realise their business potential. The business has now grown to a team of 155 members and in 2023 further extended its national footprint, opening an additional sales centre in the business district of Liverpool which celebrated £7 million in advances in its inaugural year. The business also has on-the-ground experts operating from its offices in London, Glasgow and Belfast. Since inception, Simply Asset Finance has helped to finance over 7,400 customers across the UK through 15,161 agreements. In 2023 its loan book grew by £63 million, a 15% increase year on year as it further helped to provide its customers with targeted funding. Simply’s growth has been driven in part through its proprietary technology platform, ‘Simply Connect’, which provides its customers, broker panel and partners with end-to-end lending capabilities, providing best-in-class user interface, workflow and lease management. In addition to serving Simply’s own customers and broker partners, the technology is offered as a white-labelled solution and has been successfully integrated by two lending partners. Mike Randall, CEO at Simply Asset Finance, said: “Another year on and the continued growth of the business only emphasises the hard-work of our team at Simply, and the need for better access to business funding in the UK for our customers. We’re immensely proud of how far we’ve come as a business, and these results help to further cement our growth for the year ahead. We are working hard to build a solution, and framework that sets the standard for small business lending in the UK - one that ensures every SME can get the money they need, when they need it to spur their growth.” “We’re seeing more and more signs of 2024 being a positive year for growth as SMEs demonstrate their resilience, business optimism is on the rise, and inflation is coming down. Our support of these firms is unwavering, and we are excited to see what the year ahead holds for the businesses so vital to our economy” Stefan Wolvaardt, Simply Asset Finance CFO, said: “Taking into account a year of high interest and double-digit inflation, we’re incredibly positive about the profits we have achieved at a time when every business has faced hardships. Demand has shown no signs of slowing, and with our origination to date increasing to £1.3 billion, businesses are clearly seeking to enable their growth in the year ahead which we are here to help them achieve.”
Corporate cost-cutting at a four-year high despite growing economic optimism • Two in five (41%) European businesses plan to cut costs this year, up from 28% in 2021 to the highest level seen the outbreak of the Covid-19 pandemic, despite opportunities ahead • One in three (34%) businesses are more likely to request longer payment terms from suppliers, or pay later than agreed • Businesses are losing more than a quarter of the working year (73 working days) chasing late payments* • European business are owed €10.5 trillion in outstanding payments (30% of total GDP and equivalent to the combined GDPs of France, Germany and the UK) Two in five (41%) businesses across Europe plan to cut costs in 2024, the highest level since 2021 according to the annual European Payment Report from Intrum, the credit management services provider which operates across 20 European markets. The 27th edition of Intrum’s annual study assesses the fortunes of 9,255 companies across 25 European countries. It sheds light on the myriad of challenges they face after 18 months of economic headwinds. After a recent period dominated by economic instability and the cost-of living crisis, economic conditions are improving in Europe, with inflation in March 2024 falling to 3.2% in the UK and 2.4% in the Eurozone. The brighter outlook is starting to feed through to business confidence. Intrum’s research shows 31% of executives say their business has strengthened over the past 12 months, up from 24% in 2022. More than half (55%) even say their business has the opportunity to expand over the coming years. Still, macroeconomic conditions continue to cast a long shadow. Three in five (61%) respondents do not expect interest rate reductions for at least another year, despite suggestions that the ECB may be ready to cut rates sooner. To navigate this testing outlook, the percentage of firms planning cost-cutting measures has increased for a third successive year, from a low of 28% in 2021 to 41% now. More than one in three (34%) businesses are more likely to request longer payment terms from suppliers, or pay later than agreed. A further 15% of businesses say they will begin extending payment terms in 2024 to navigate the economic disruption and downturns. At the same time, almost one in ten (8%) are looking to reduce the payment terms they offer their own clients or customers to help manage cashflow. Table 1: New corporate actions planned for 2024 to manage economic disruption and downturns Across Europe, businesses in Spain (20%) are the most likely to ask suppliers for longer payment terms, closely followed by Italy (19%), Portugal (18%), France (17%) and Denmark (17%). However, Intrum’s research highlights the negative impact of longer payment terms, or debtors simply not paying, as businesses spend significant time chasing down late payments. Across Europe, the average business is losing more than a quarter of the working year– 73 working days – a year chasing late payments, channelling valuable time away from focusing on their core business, including growth and innovation. Table 2: Countries where businesses are most likely to request longer payment terms from suppliers European businesses are currently owed €10.5 trillion – 30% of total GDP and equivalent to the combined GDP of France, Germany and the UK– in outstanding payments from customers and creditors. Large businesses are owed €5.1m on average, while SMEs are each waiting on €448,000. Looking at amounts owed by sector, organisations in government and the public sector have the biggest outstanding amounts (€5,135 million), followed by banking and financial services (€3,782 million) and insurance (€2,813 million ). Andrés Rubio, President & CEO of Intrum, comments: “It’s troubling to see that cost-saving challenges are piling up for thousands of businesses in 2024, to a greater extent than at any time in the last five years. Businesses having to cut costs and ask for longer payment terms from suppliers while insolvencies are increasing is a concerning trend. It is understandable that executives are nervous in the aftermath of recent years’ challenging economic environment. We must help businesses to manage and recoup the money they are owed and encourage suppliers and customers to pay on time, to avoid putting growth on hold and necessitating cost cutting measures to survive the current headwinds.
15 | Wealth & Finance Q2 2024 Governments and industry alike must take steps to make sure that businesses are being supported and on time payments encouraged in order to avoid disrupting businesses’ cash flow and their ability to pay their debts. Without doing so, the problem only escalates and creates a cycle of unresolved credit commitments.”
&wealth finance i n t e r n a t i o n a l Distributed each quarter to more than 65,000 high net worth and ultra-high net worth individuals, fund managers, institutional investors and professional services firms, Wealth & Finance International has rapidly become the go-to resource for those looking to make the right decisions when it comes to securing and growing their wealth. SUBSCRIBE www.wealthandfinance-news.com
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