Ben Hewson is business development manager and professional services sector specialist at Hitachi Capital Invoice Finance

Accountants increasingly need to demonstrate their knowledge of the shifting alternative finance landscape in order to secure the trust of business owners and match them to the right finance solution. But is their knowledge up to date?

Facing intense competition from new market entrants and a downward pressure on fees, a growing number of accountants are finding that understanding alternative finance can add significant value to their client relationships. In particular, their ability to advise business owners about asset-based finance and manage introductions in areas like crowdfunding and invoice finance is an increasingly important element of their professional client service.

While most forward-looking accountants appreciate that it is important to stay up to date with all lending options, others are falling behind. In these cases, there are real risks that they could be cut out of the equation altogether as tech-savvy business owners choose to go it alone. In the past, accountants acted as intermediaries; helping businesses to import Sage systems and the like, but increasingly businesses are sourcing cloud accounting packages independently and filing their tax returns to HMRC online.

In reality, the average business owner of a small or growing firm is unlikely to have the resources or expertise to navigate their finance options without the guidance of a trusted adviser. However, there is a real risk that they might try to do so if their accountant seems unable to help.

Staying abreast of what is happening in the world of alternative finance is not easy of course and accountants need to be able to help businesses to make the right choices. One area where their knowledge can sometimes fall short, for example, is in the area of invoice finance.

 Modern invoice finance offerings can be extremely helpful to private businesses seeking flexible finance to fund their growth plans. It can be sourced quickly, usually within 24 hours, and can be managed easily by the business owner via an online portal. As a secure form of asset-based finance, business owners often find they have access to more funds than expected because they are calculated based on the company’s debtor’s ledger rather than its balance sheet. They also appreciate the flexibility of invoice finance, which can be used in conjunction with a standard over draft facility. The business owner can draw down funds as and when they are needed and as the company’s profits increase, they can reduce their use of invoice finance gradually and chart their way to a self-funded future.

Another key area of finance that accountants need to have a good grasp of is Peer-to-Peer lending, including crowdfunding platforms. By matching the business owner to the right source of finance, the business can gain access to some valuable market insights to support their business growth. However, the returns payable to some crowdfunds can be high and in some instances, investors may require some degree of business control. The business owner and their professional adviser need to take such factors into account.

Based on a recent survey, we know that about 40% of small businesses approach their accountant first for advice about their finance options. This is a real opportunity for professional advisers who want to differentiate their service and position themselves as a financial friend to small and growing businesses. The key to success is big picture thinking and sound knowledge of the ever-changing alternative finance marketplace.