Cookie Consent

By clicking “Accept”, you agree to the storing of cookies on your device to enhance site navigation, analyse site usage, and assist in our marketing efforts. View our Privacy Policy for more information.

Kriya’s risk approach in uncertain times

March 22, 2023
min read
Share this:

Our Chief Risk Officer, Michael Hoare reflects on the current economic landscape from the Risk team perspective

Kriya's risk approach

After some unprecedented global-scale events the market has been shifting and businesses worldwide are feeling the impact. Read on to hear from our Chief Risk Officer, Michael Hoare on the current economic landscape from the Risk team perspective.

“The times, they are a-changin.” - Bob Dylan

I am not much of an audiophile, but that sentiment certainly seems relevant at the moment for both consumers and businesses.

At the macro level the last few years have seen considerable upheaval. The COVID-19 pandemic, inflation in developed economies, energy shortages, an armed conflict right on Europe’s border, three UK Prime Ministers in the space of 51 days. And more recently there’s been the fear of a banking collapse as headlines are flooded with emergency meetings, central banks offering credit lifelines and tumbling bank shares. These are just the obvious events that immediately come to mind close to home. However, the full impact will take time to materialise and there are many more factors specific to certain geographies or sectors, which have knock-on effects and exacerbate that list.

At the micro level, every consumer and business is experiencing their own unique environment caused by these events. Consumers likely care more about rising interest rates and their energy bills than they do about Prime Ministers. Some businesses are more exposed to energy price increases, while others are likely benefiting from the increased focus on renewables and energy saving schemes.

Uncertainty is word of the year

What is consistent among all groups is the concept of uncertainty. The period starting in roughly 2010/11 (once the financial crisis had abated) and ending in Q1 2020 (when the COVID pandemic really started driving change in the UK) will likely be looked upon by historians and economists as a wonderfully stable period compared to what followed. The stock market grew, inflation was modest, unemployment was falling, and interest rates were low and stable.

The last three years, and more, will be labelled anything but stable. Uncertainty is a challenge for consumers and businesses alike. For a business, particularly small and medium sized ones, uncertainty could be reliance on one banking partner, not knowing when they will be paid by their customers (a thinly veiled plug for Kriya’s Invoice Finance product), whether contracts they rely on will be renewed or if they can find the staff to do the work.

Insolvencies are on the rise

Monthly insolvency volumes for the last three years, sourced from Insolvencies were higher in 2022, off the back of a lull in previous years caused by the pandemic. The outlook for businesses in 2023 and beyond is also now more uncertain.

Kriya’s track record in supporting businesses through tougher times

Kriya has a superb track record in lending to businesses through its Invoice Finance product. In the last decade, we’ve lent over £3bn. Where businesses hit rocky times, our record on recovering balances has also been excellent, due to the security inherent in the product (the underlying invoices) and well-time recovery actions.  We’ve seen recovery rates in excess of 75% of defaulted balances throughout this period.

As we look forward into more uncertain times there are a number of actions we have already taken to ensure we are lending prudently. We’ve done a full audit of our portfolio to identify very recent risk trends and enhanced monitoring of SME cash balances through Open Banking. We’re diligent in management of facility limits, adjustments to our pricing and consideration of exposure to industries and sectors, which might be more susceptible to a downturn in the economy.

However, more uncertain times can also provide opportunities for some businesses to thrive and there will always be a need for funding. The larger lenders often pull back disproportionately when times get tough leaving SMEs with solid businesses in need of funding. Being nimbler than our competitors, we’re well positioned to continue to support strong businesses whilst delivering attractive risk-adjusted returns for our investors. The recent news about bank failures in the US and Europe is likely to accelerate this as caution increases and institutions look to position themselves as much safer in the eyes of their investors.

If you’re interested to learn more about Kriya Lending, get in touch via the form below.

B2B Payments to boost your growth

To learn more about our payments and digital trade credit solutions book a call with us today.
Email is invalid.
Please use your company email address.
Annual Revenue*
We’ll use this information to get in touch with you about our products and services in accordance with our Privacy Policy. You can unsubscribe at any point. By submitting, you acknowledge we reserve the right to work with businesses that have been trading for a minimum of 12 months and have submitted at least one set of financial accounts.
Thank you. A member of the team will be in touch.
Oops! Something went wrong while submitting the form.

Explore related posts

Anil Stocker Kriya CEO 2023

Kriya’s 2023 in review: transformational growth and positioning ourselves for the future

Our CEO, Anil, reflects on the big trends of 2023 and how these will shape the year to come.

 min read
Read more
Online payments and digital trade credit are digitising the last steps of offline multichannel b2b sales

How online payments are digitising the last steps of offline B2B sales

eCommerce won’t totally replace the way businesses buy from each other any time soon. But even traditional B2B retailers are benefitting from digitising the final mile of their offline sales. Here’s how.

 min read
Read more

Barclays Business Health Pledge Masterclass: Working Capital Solutions

Our CEO and Co-Founder, Anil Stocker, shared his expertise on the topic of alternative financing with Chris Forrest, Head of SME UK, Barclays Business. Find out how invoice finance can help!

 min read
Read more