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Time Finance plc (LON:TIME) CEO Ed Rimmer spoke to Directors Talk in an exclusive interview about the key reasons for the company’s success, its key differentiators, its outlook for the rest of the fiscal year, and what investors can expect going forward.
Q1: Ed, just looking at your updates, it looks like business is going well. What do you think is the main reason?
A1: There are several main reasons.
The first is the market. I think the opportunities that have presented themselves to us have been brought about by the challenges that small businesses face. Obviously rising interest rates, rising inflation, supply chain difficulties, all of this adds up to the point where small businesses will have to access third party funding, especially after the government funding scheme ended a few years ago. It’s gone.
So interest rates are high and naturally you might think that’s a precautionary measure for businesses that want to or need to borrow money, but clearly the products that we offer, especially our cash flow financing solutions. Invoice finance needed to be accessible to people. Cash flow.
I think that’s created opportunities our way over the last six to 12 months, and we’ve seen some very interesting opportunities as well.
Partly also because larger lenders, especially banks, are also becoming stricter in terms of their credit risk profiles, which is pushing opportunities into the market for independent alternative lenders like TimeFinance.
The second reason is actually our own internal planning and strategic focus. When we rebranded the company a couple of years ago, we moved away from being a conglomerate of brokerage and lending businesses. We are focused on lending our own books, with 97% of our book volume in the past six months being in-house book lending. On the other hand, the percentage of books with some mediation is 3%. solution.
So we only broker a small portion of it, which still provides us with that opportunity, but the majority of our transactions are based on our own books, and we do asset finance and investment. We focus on our main product which is voice finance. Both are secured loan products. That was our big focus.
I think the talent that we’ve brought in, the focus on our unique lending product, the proposition that we’ve been successful in bringing to market in terms of our current position within the broker community, I think it all adds up. We are pleased with how our strategy has turned out.
Q2: What are your key differentiators in the market?
A2: I think one of our key differentiators is definitely our product offering. That’s why we are a multi-product provider. This means we offer multiple solutions to small and medium-sized businesses.
Therefore, we can offer:
- Invoice financing for cash flow finance, an alternative to typical bank overdrafts
- Fixed asset financing through traditional HP and leasing
- Business loans are typically secured by real estate charges, usually with secondary charges on commercial or residential real estate.
More importantly, we can now offer a combination of all three lending products through our asset-based lending service, which we launched last April. These deals tend to be smaller in number, but have greater value, last longer, and are slightly more rewarding for us.
So this is a key part of our plan is to really drive multiple product offerings.
Not many competitors can do that, but some can. Typically, a large competitor can offer multiple products, but tends to lack in terms of personal touch and flexibility, while a smaller competitor tends to offer his one product.
We are part of a small group of providers that can offer multiple solutions to small and medium-sized businesses, and we believe this is a key differentiator for us.
The other is our authentic approach to small business lending. It is very service oriented, very flexible, very personal and also fast. By their very nature, small businesses require quick decision-making. Over the last year, we’ve focused on speeding up the process so decisions can be made as quickly as possible.
So I think they really were the differentiators and helped us have a successful first half of the year.
Q3: How do you think the remaining financial year to 2024 will play out?
A3: Well, I think it would be a very similar situation. From the first half of 2024, that is, the second half of the fiscal year, he does not think there will be any significant changes for the period up to the end of May.
I think the bankruptcy market will continue to be busier than ever, but unfortunately there are many more companies struggling, and despite encouraging signs that inflation is slowing slightly, I don’t see how things will change. not. There’s no question that interest rates have peaked, but I don’t think the impact on small businesses will change at all dramatically over the first six months.
Therefore, I think there is still a chance. Unfortunately, I think there is still a fairly high number of bankruptcies in the small business market. And that will be an opportunity to provide businesses with much-needed cash flow solutions and funding.
There will still be opportunities, but there will also be challenges. Because obviously in that environment we have to protect our books. Book arrears have remained relatively flat and the overall size of books has increased, so I’m really happy about that. Increased. We currently have over £185m lent on percentage terms, but the amount in arrears remains unchanged, ensuring that we maintain our quality in an environment of increasing stress on clients and customers. It is reassuring that we were able to do so. I need to improve.
So it’s all about getting the balance right, making sure you choose the right opportunities and getting the right balance of credit risk and reward, and that’s what matters at the end of the day.
Q4: You mentioned earlier that strategy changes are positive throughout the year, but what else can investors expect from Time Finance from year-end through 2024?
A4: Back when the business was called 1PM, before the rebrand, it consisted of a number of acquisitions, some of which were in consumer finance and some into B2B finance. and some were involved in intercompany finance. Some of them were their own book lenders, some were brokerage firms, and it was quite confusing.
One of the things that my board and I have been particularly keen to focus on in our current strategy over the last few years is simplifying our business, and I think that’s been very instrumental in our strong performance as well. I don’t see myself deviating from this goal over the next six months.
This time next year, we will be finalizing our next five-year plan. They may contain slightly different content in that they lead to other products, but we still recommend that they be adjacent to what we have planned. It is already happening in the asset finance and invoice finance markets.
It doesn’t seem like we’re deviating too much from the plans we have planned, but the reality is it’s all about making the most of it, and how many great opportunities are there that we haven’t yet made the most of? I think there is. If we can continue on this path, we are sure to have a successful year.
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