Funding at the service of professional services
ThinCats works with many professional services businesses (PSB) to help their clients – from restaurants to manufacturers – access the capital they need. But we also work with PSBs that wish to raise finance themselves.
PSB covers a range of diverse knowledge-intensive industries which provide specialised support to businesses. These include many sub-sectors, from architects to marketing agencies, but the principle areas – and the ones where we have greatest engagement – are those offering legal, accounting, financial advisory and consultancy services to business clients.
There are a host of reasons as to why these businesses are intrinsically attractive as a lending proposition, not least that the borrowers are skilled professionals who understand the funding process.
This is also an incredibly large and important sector for Britain’s economy. PSB accounts for almost 11% (£186bn) of the UK economy’s gross value added and 13% (4.6m) of employment, 60% of which is outside London and the south east. The UK is a major exporter of PSB: providing some 27% (£66bn) of the UK’s services exports, with Britain being one of the top three exporters of these services in the OECD.
https://www.parliament.uk/documents/commons-committees
Long tails
PSB is a big beast with a long tail. Much of PSB activity is done by ‘the Big Four’: Deloitte, EY, KPMG and PwC.
But alongside such companies stand a huge number of SMEs. Indeed, fewer than 1% of PSBs have above 250 employees: 1,355 out of about 595,000 registered businesses in 2016. For the 99% that are smaller than this, a FTSE100 listing is not an option. That’s where alternative finance and ThinCats come in.
We have a strong national network of business development people who know this sector: they have all worked with it for years – sometimes decades – and most have worked within it as well. As such, they’ve got an excellent understanding of the financing needs of PSBs.
Interesting times
The PSB sector is living through interesting times: digitalisation and artificial intelligence are having a truly transformative effect on the sector: for example, the University of Sheffield is working with law and accountancy firms to develop methods to improve adoption of these methods. Such developments have the potential to automate previously dull, low-margin activities such as document processing to make what are already generally high-margin businesses even more competitive.
To realise the full potential of these changes, PSB firms will often need finance, structured in such a way as best suits their business needs. And for that they are best served by funding partners who thoroughly understand those needs, and who have the flexibility to offer them bespoke deals.
According to the UK government: “PSB includes a diverse set of high-skilled and tradable services. The character of the industry is dynamic and evolving… The PSB industry contributes to wider UK economic growth and productivity by providing innovative solutions and business approaches.”
We want to ensure that this dynamism receives the funding it needs in order to keep evolving and innovating as competitively as possible.
