In this guide to the types of information technology finance available to UK businesses, we’ll cover a range of challenges and opportunities facing the IT sector today – such as skills shortages, cybersecurity demand and how industry players can strengthen their market position.
Scenario 1 – Combat business investment decline with information technology finance
The IT / technology sector has applications of business value and a vast range of partnership opportunities with other industries. The recent Office for National Statistics Business Investment data (January to March 2018) has shown Information and Communication Technology (ICT) equipment and Intellectual Property (IP) products largely contribute towards the 0.9% increase in gross fixed capital formation (GFCF) between Q4 2017 and Q1 2018, whilst offsetting a fall in business investment contributions from Transport and Building and Structures classed assets.
Figures such as these present those firms currently developing and selling ICT equipment and IP products with a noteworthy challenge: do these positive quarter-on-quarter increases indicate a greater potential for further future business investment?
If this question is being considered, there are numerous ways in which your business could resultantly evolve – perhaps you’ll look to enhance your IT services and capabilities in order to take on bigger jobs with higher-profile companies in need of ICT solutions such as business intelligence software. Another business decision could be to fund training courses to upskill staff to further their expertise in programming languages or focus on upgrading stock/inventory quality in order to deliver improved hardware or software products.
No matter your business’ chosen strategy, though, you’ll still need to find the working capital to pay staff, suppliers and the internal costs of running a dedicated technology firm.
One information technology finance solution which could prove of great use here is invoice finance, an increasingly popular facility that allows businesses to access high percentages of their invoices’ value within as little as 24 hours, as opposed to waiting 30-120 days for customers to submit payment for completed work(s). As such, should your business’ willingness to pursue new technologies, raise its reputation or take other actions to overcome recent investment trends seem constrained by the oft-tiresomely slow process of credit collection, then now’s the time to consider whether invoice finance might represent a suitable means by which to fund these efforts and preserve working capital all the while.
Scenario 2 – Develop your core capabilities and assets to meet cybersecurity demand
The 2018 Cyber Security Breaches Survey highlighted vital opportunities upon which businesses within the industry will undoubtedly hope to capitalize. The investigation, as reported by the Independent, revealed that 43% of UK businesses had alerted the Information Commissioner’s Office to cybersecurity breaches or attacks within their infrastructure over the last 12 months, with a staggering 72% of large-scale firms affected during this period.
Indeed, in the wake of last year’s NHS ransomware attack – which we covered in our dedicated blog – and the recent implementation of the EU’s General Data Protection Regulation (GDPR), few instances come to mind where the interwoven matters of data protection and cybersecurity have held greater importance for businesses. IT and tech companies can perhaps see the clear advantage of the situation. What better way could there be to ensure your partners’ or clients’ continued custom than by researching the market’s current offerings and developing improved software functionality to meet the ever-changing requirements, especially with the penalties that the EU can now impose under the GDPR for those firms failing to take adequate data breach prevention measures?
The most suitable information technology finance solution here will depend largely on your business’ current size, equipment and ambitions, but for those SMEs who are aiming to invest in their own assets sooner rather than later and wish to reap the full benefits of doing so, asset finance might well warrant a look. Asset finance instead involves securing key machinery, equipment or technology assets be it hardware, software or services for your business and repaying for these assets through leasing, refinancing or hire purchase arrangements.
If your business wants to invest in business critical software, security hardware, training or consultancy support, then gaining information technology finance could prove invaluable.
Scenario 3 – Overcome industry skills shortages with a recruitment campaign
Skills shortages – it’s the problem that every industry fears but no-one yet knows quite how to adequately counteract. Already organizations such as Prospects are encouraging technologically-minded students and the next generation of workers to hone their skills in areas such as big data, cloud software competence (demand for which rose by 98% between Q2 2016 and Q2 2017), cybersecurity and programming to boost “the key growth areas” for the UK economy, whether by applying for certain university degrees or through dedicated training schemes.
How can your technology company hope to reach out to these budding software developers, security analysts and other tech whizzes? A placement scheme or undergraduate recruitment campaign could be the answer to enticing and obtaining the tech skillsets of today into your business and to fulfil any shortfalls in internal competency.
For those IT / tech firms considering internal investment, , an unsecured business loan might prove the most suitable solution to gain information technology financing. Here you’ll receive a pre-determined amount from your chosen funder to be repaid over a set window of time – from several months to one or more years – which in turn enables your business to choose whether to run a recruitment drive which matches the terms of the facility arrangement.
Find out more
You can visit our invoice finance, asset finance and unsecured business loans pages for more information on how these services can align with the strengthening of your operations. But above all, get in touch today if you have any queries or want to pursue one of these information technology finance solutions and one of our expert consultants will be happy to help.