Financing for growth amid the green shoots of recovery

Written by: RWW | Published:

There have been more than a few green shoots noted in the economy in the recent past, so it’s no surprise that senior decision-makers are now turning their minds to growth opportunities and how this can be achieved in a sustainable and successful way. Sean Dixon, head of services sector, Royal Bank of Scotland, looks at how businesses can plan for growth.

In April, the International Monetary Fund (IMF) said it expects the UK economy to be the fastest growing in the G7 this year, predicting growth of 2.9% in 2014, up from a January estimate of 2.4% and more recently Bank of England governor, Mark Carney announced an expected uplift for GDP for 2015. 

When planning growth, the first key decision that management teams need to consider is whether they tactically want to pursue an organic strategy, or are prepared to take on the potentially more uncertain option of pursuing acquisitive growth. 

Both approaches have their merits but it is a decision that will drive where time is spent in the short term to achieve their longer term aims. Once this strategic decision has been taken it is then necessary to identify where the growth is required. 

Is it building on existing capabilities or adding new disciplines, or perhaps opening up in new areas or even countries? 

Indeed, the eventual outcome is likely to be a combination of all of these, but each will require careful consideration, planning and execution if the plan is to be successful, sustainable and create long term value. 

The availability of appropriate resources should form a key part of the planning process with management’s time and capability and access to adequate financing being high on the list of needs.

When it comes to financing there is a range of options to be considered and much will depend on whether you need acquisition financing, capital expenditure funding or just increased working capital to manage expected increased turnover levels.

What is essential, however, is that you are talking to a bank that understands your business and the industry in which you operate. This takes investment in time from both you and your bankers if the outcome is to be beneficial to both parties and as with all relationships it’s generally far more productive if both parties are content with the outcomes.

Key tips for ensuring you get the best out of that relationship

Does your banker really understand the business you operate in?

Have they invested time to understand what your plans and aspirations are for the business? They need to know what management and, if different, shareholders are thinking if they are to be able to provide the most effective solutions. What is the end game? Is there an exit strategy? If they don’t know, they may not be able to provide the best solution to fit the needs of the various stakeholders involved

Do they understand your own business in detail, including the strengths and weaknesses - it is essential that you share all aspects of the business so that they are able to articulate your story to their own internal stakeholders. If they are to maximise the levels of support they can provide, this is key. The onus is on you to share details regarding your plans and thinking, including downsides, contingencies and Plan B scenarios. We all understand that change happens but keep the bank informed to avoid surprises

Make sure both parties discuss how the relationship should work. Agree who needs to be involved on both sides, frequency of contact, information flows and anything else that will help decision-making by both parties. The relationship needs to be open and honest from both sides if it is to work successfully

Are you happy with the proactivity of your banking partner, their ability to respond when required and capability to deliver when you need it? If the answer is ‘no’ then go out and find someone who can.

Getting these relationships right can make the journey to achieving incremental growth much smoother. There will always be twists and turns along the way but having a full, frank, open dialogue is likely to make the outcome far more successful for everyone involved.

Six ways to reduce business costs

With the economy now pulling away from the effects of the recession it is vital that businesses across the waste and recycling sector strive to keep costs under control. 

Here are a number of ways in which your bank can help:


A secure e-invoicing system saves time and money while reducing the possibility of error and fraud. People are often put off using such systems because of the potential IT required, however an IT overhaul is not necessary. 

At RBS our e-invoicing system works in synergy with existing systems to connect all parties within the supply chain. The service can be deployed in both accounts payable and receivable environments. 

To find out how much you could save, try the online calculator at 

It also tells you how many trees will be saved each year - an important consideration with the environment continuing to be so high on the business agenda.


While credit headroom in your overdraft and revolving credit facilities can provide much required flexibility in these uncertain times, analysing your historic usage of these facilities and removing any unnecessary capacity can save on future arrangement, renewal and non-utilisation fees. 

And for those businesses whose facilities are covenant compliant, additional cash may be generated by discussing whether a reduction in your amortisation schedule is possible. The savings made could be used to fund investment or provide additional working capital to finance growth.    

Cash management 

Cash is the lifeblood of a business so a regular cash management review is essential and is an invaluable opportunity to review your operational banking and identify ways to improve your cash flow. 

You will receive recommendations on how to streamline your payment processes, improve your terms of trade and maximise liquidity and returns on surplus cash.

Payment cards

There are numerous credit, purchasing and payment type cards potentially available and these can be used to maximise credit and improve internal financial controls and data management. For example, one way to manage spend is with Approval2Buy - a web-based pre-approval process from RBS that gives you control over spending and reconciliation. With a notable reduction in the risk of unauthorised spend or billable purchases that cannot be reconciled, savings can be significant.

Finance your technology spend

Technology requirements vary across businesses, but flexibility is a common theme. More inclusive funding packages are now available to address the cost of both software and installation, including finance to recapitalise customer developed software and specific IT funding programmes. 

At RBS we have a dedicated technology financing business - Lombard Technology Services - which can fully assess your requirements, including residual values in your existing IT kit and help you chose between buying or leasing in the future. 

With greater certainty about the value of your IT assets, savings are easily identified.

Invoice financing 

A financing technique that could be beneficial to waste and recycling businesses is invoice financing. In simple terms, this mainly web-based service provides an expanding source for working capital where you can receive a significant value of each invoice within 24 hours. The remainder is yours, less the bank’s fees when your customer settles. 

This eliminates the problems of late payment, smoothes peaks and troughs in your sales cycle and frees up management time to concentrate on growing the business. 

Discussing any of the above with a relationship director who understands your business could enable you and your team to explore more ways in which you can grow your company.


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