20 November 2019 Business

Compass Business Finance: It’s funding, if not as we expect it

Compass Business Finance is responding to changes in the industry by adapting the style of finance that it can offer.

Fifteen years ago, it was about a saddle stitcher and a press,” says Mark Nelson. “Now it’s just as likely to be wide format. Print has become a much more diversified market, which is healthy for the industry.

“We recognised that and have been working with that change. It’s still printing, just in a slightly different way. And it still needs funding.”

Mark, with brother Jamie, is the driving force behind Compass Business Finance, a broker that is active across print where it is expanding fast, and in the engineering sector. This year Compass has recruited a veteran of the finance sector to boost the engineering side and has welcomed long term Close Brothers executive David Bunker to the print side.

“We started talking with David last year, he was looking for a new challenge and the fit was right. He is still very recognisable within the industry and we want to grow the business.”

That means expanding beyond asset finance, the traditional role of brokers in print. Asset finance reflects the general state of the industry: there are fewer machines being installed, hence less need for traditional purchasing products. This has encouraged Compass to look at finance options for digital devices and more, and to diversify into different styles of finance that a business might need on its journey.

“We have added a standard commercial loan product in the last three or four years. This is really useful if a business needs cash for a strategic reason without having the asset base to support it. As long as you are willing to commit to the business as much as the commercial loan, we can facilitate that,” he says. “It’s a massive differentiator.”

Compass has access to numerous sources of finance, able to work with those that are in the mood for lending or which are happy in print.

Nelson points to a company that had only worked with one bank since it started 40 years ago. The bank had provided loans for investment, ran the current account, cash flow finance – everything. And should therefore have understood its customer. When that company needed a loan to facilitate a move to new premises, and despite having £2 million of asset cover, the bank said No. Compass was able to step in and the move took place.

Forty years ago the bank might have had a locally based bank manager who personally dealt with clients. This has moved over the years to business relationship teams, regionally then nationally based. Now such banking decisions are likely to be taken by algorithm. It is the arm on the shoulder role as much as asset funding that Compass wants to fulfil.

“We are now getting involved with invoice finance, helped by the Enterprise Finance Guarantee Scheme (designed to support businesses without the asset cover) and we are now looking at commercial mortgages, which is a very different market. And we can help with funding M&As. We have access to asset finance and commercial loans so can facilitate say, a change in ownership.

“What we want to do is get the conversation going. It doesn’t cost anyone to have a conversation and banks today no longer have the expertise.”

The increase in the scope of finance provision is seen in the work that Compass has done for Precision Printing. Compass put together the funding for that company’s move to new premises near Dagenham, helping specify fitting out details to make an empty shed suitable for the print business.

“We have known Precision for many many years. Trying to put a £1 million factory move together is no easy matter, yet the benefits to the business are massive. Funding would be difficult.

“We dealt with all the contractors, and took a massive weight off Precision's management as a business. We syndicated the deal to a handful of funders who were all aware of what was happening and were each happy to support the project to a set level. A banker could not have taken this on.

“There might be a specialised funder for factory moves, but I don’t know who they are. And they certainly wouldn’t understand the printing industry.”

Precision's move from a two level factory reliant on a single lift to move work in progress and materials between floors to a single floor site where production workflows can be optimised, was a no brainer for someone with an understanding of print. It might be considered vanity or an unnecessary burden by an outsider to the business or industry. And the deal arranged had enough head room for Precision to fund investment in new equipment.

“You have to love operations and ideas in this business, which is why we were able to manage the whole project.”

That is what Compass and Nelson is offering. Compass understands print, sometimes perhaps better that the directors of individual businesses. “We have been through it. Very few understand the requirements print has. We recognised that this is a very changed market and we have been working with that change. It is still printing, just in a slightly different way.”

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Compass Business Finance

Compass Business Finance

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