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Peer2Peer Finance News | September 23, 2017

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Accountants emerge as potential “kingmakers” for P2P business lending

Accountants emerge as potential “kingmakers” for P2P business lending
Kathryn Gaw

ACCOUNTANTS could have a much larger role to play as introducers between small- and medium-sized enterprises (SMEs), investors and peer-to-peer lending platforms, industry insiders have claimed.

A number of P2P lenders and accountants have told Peer2Peer Finance News that accountants could emerge as the “kingmakers” for SME-focused P2P platforms by referring potential borrowers towards alternative finance.

This follows recent research by P2P invoice finance platform MarketInvoice which found that 56 per cent of business leaders consider their accountants to be their most important external advisers when considering business finance options.

“Partner introductions are a very important part of our business,” said Darvish Heshejin, head of partnerships at MarketInvoice. “Around 20-30 per cent of our inward referrals come from accountants.

“Accountants are increasingly becoming the advisors for their clients. We’ve seen more accountants advise their clients on funding decisions. That means they need to be aware of the wider availability of options on the markets.”

While there is no formal introduction policy in place between accountants and P2P platforms, many lenders have chosen to work directly with smaller accountancy firms, educating them on the risks and opportunities involved with P2P lending. According to one accountant, a lack of mainstream funding is forcing accountants to look at alternatives as a way of proving their value to their clients.

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“One of the key issues in any growing business will always be the funding of working capital,” said Bobby Lane, partner at accountancy firm Shelley Stock Hutter.

“The type of facilities available have changed dramatically over the last decade and many business owners do not know what to do or where to turn. They are now looking to their professional advisers more than ever to translate the jargon and identify the appropriate type of funding to support their plans.”

This represents a huge opportunity for P2P lenders to get on the radar of accountancy firms across the country. Lenders can then leverage the existing relationship between the accountant and the client, and build on that trust. The accountant may also be able to process the documentation on behalf of their client, speeding up the whole funding process.

“For sure, I agree that accountants could be the kingmakers for our online funding solutions.” said Heshejin.

“They are the ones whose relationship with the business end-user is often the strongest, so their championing of our products helps to get deals over the line.

“Certainly, if we are going to further expand our product reach, we need to get accountants on board.”

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Accountants are not regulated by the Financial Conduct Authority (FCA) and therefore cannot provide financial advice. However, they are able to suggest funding options for their small business clients.

As P2P lending becomes more mainstream, some believe that accountants may even be able to suggest alternative investment opportunities for cash-rich businesses which are trying to diversify their funds.

“Accountants often work closely with SMEs, advising both the individual and the entity, which puts them in a strong position for broaching discussions around P2P,” said an Octopus spokesperson.

“They are well placed to recognize the need for more attractive returns but less volatility than equities.

“P2P can be a great solution for excess cash on a corporate’s balance sheet, so it’s a hot tip for accountants advising corporates.”