Secrets of success: Richard Fossett

What products or services do you provide?
TradeRiver Finance offers a paperless purchasing system that provides working capital to UK businesses and removes complexity from their supply chains and, enabling purchasers to transact with the confidence of a cash buyer, all via a secure online platform. TradeRiver considers providing a facility if a business is credit-worthy, has a trading history of at least two years and revenues in excess of £500k. We have Buyers ranging in turnover from £5m to £500m, with typical credit limits from £100,000 to £750,000 and suppliers all over the world. Buyers can select their own credit period of up to 120 days.

What is your USP?
Trade River’s USP is that we are the only provider of online supplier funding using a secure, paperless end-to-end solution.

Some other companies offer a similar type of process but not funding and transaction execution. Certainly, we are the only people to offer unsecured funding using AIG Trade Credit Global Limits insurance. We are a pioneer in that field. Separating goods and services from their funding requires a very special form of credit insurance and we are fortunate to have partnered with AIG to do this.

What have you done to make sure you get the right people with the right skills in place?
When we started and for a long time, Toby Lanyon and I were the
only employees and relied on consultants for peripheral work. Now we have eight people in different disciplines. They are all people with trade finance and sophisticated sales experience. We are focusing on younger graduate employees so we can have people with a better understanding of digital marketing and social media and we are keen to give some younger people a chance, too. TradeRiver is unique, so having young talent who can quickly absorb what we do and grow with the business is important. We need them to have the ability to deal with people and be personable as a lot of it is client facing – we are always “selling” the proposition.

Do you have any tips for managing suppliers and customers effectively?
While TradeRiver’s proposal is attractive, often enabling buyers to access funding where it might not otherwise be available and to negotiate better rates with suppliers and accelerating payments for suppliers, it is a new approach, which presents some challenges. Once “sold” on the idea (itself an interesting challenge), the key to managing our customers is to provide an excellent “online experience” combined with rapid personal response to queries and suggestions when they arise. Our customers are often busy, pressurised companies which rely on us to execute our service exactly as expected – every time. So reassurance and then delivery for new customers is a focus. Thereafter, our main focus is listening to customers they alone can tell you how to improve!

Any finance and cash-flow tips?
SMEs should look at their credit history and be sure of their credit worthiness. This means making prompter payments, working with a credit agency (Credit Space), finding an accountant or working with a specialist. Cash is king for SMEs. Make sure your cashflow forecasting is up to date. Don’t over-trade and don’t over-extend yourself. Know your market and who you are dealing with. Make sure whoever is running your sales knows the market, too. Perhaps most importantly, if you find you need help with cashflow or working capital to grow or otherwise help your business, don’t be discouraged if your bank turns you down when you request facilities from them. Look elsewhere. There is a growing number of alternatives out there and research shows that many companies assume that if their “house” bank refuses them, funding won’t be forthcoming from others and they don’t even try, which in many cases is a mistake.

Any advice for the government?
Encourage diversity of funding sources. Despite high profile exceptions, such as Funding Circle and MarketInvoice, which both received government support in a previous initiative, the current Business Bank’s target to deploy £300m in funding to the SME sector by June 2014 looks highly unlikely to be met, with only a small proportion of these funds currently approved for deployment.

This is disappointing and perhaps reflects the political and regulatory difficulties faced by the UK government in supporting the private sector. Nevertheless, given that the government recognises that a healthy and growing SME sector is vital for the economy, a redoubling of effort and application of imagination are sorely needed to realise the government’s ambitions.

While Vince Cable seems to be a supporter of “alternative finance” as being a small but vital and fast-growing sector, much needs to be done to help raise the profile of alternative solutions and encourage SMEs denied access to finance from traditional channels to consider and understand them.

What is your attitude towards your competitors?
Trade River has no real competitors as nobody is doing what we do at the moment. Banks are offering supplier finance to larger corporates but there is still a lack of access to working capital.

Any thoughts on the future of your company?
TradeRiver’s solution could grow to be a global standard. As we are a digital solution our business is scaleable, operates very effectively cross-border and is straightforward to establish elsewhere (we now have a partner in the US – TradeRiver USA), and we aim to enable our product to operate in other countries as the opportunities present themselves. In the UK, we aim to have at least two more employees in 2015. At the moment we have around 100 clients (40 UK buyers and 60 sellers) and we’re adding around five new clients per month. There’s no trading pattern; our clients range from wheels and tyres to nail varnish products. The appeal appears broad. What they do have in common is that they are growing companies with good products and sound trading links – and the desire and initiative to use a new funding solution.