To finance himself and achieve the first external growth in 2020, Stéphane Madec, administrative and financial director of the Altarea group, a player in energy, climate for the energy and environmental transition of buildings, has always knocked on the door of banks. The company, which has achieved organic growth of 30% per year for 10 years, needs these resources to finance its development projects in complementary activities. Since the start of the health crisis, when he consults his historical banking establishments, nothing has changed. “We work with a banking pool made up of four banks for investment expenses, working capital requirements, Bpifrance, which supports us with short-term financing, and since 2019 with the Paris Fonds Vert investment fund. Relations did not strain. There is no mistrust but a relationship of trust »reports Stéphane Madec.
Communication and amplified listening. This is also what Jean-Marc Tariant, independent consultant and founder of the firm Finance & Stratégie, observes. According to this expert, the momentum of the recovery plan, of ‘whatever the cost’, which allowed the financial departments to consolidate their cash flow, still seems very present. “Before the Covid years, in a normal year like 2019, there were around 60,000 bankruptcy filings per year. With state aid, in 2021, there were barely 30,000. There was a reduction of nearly half in bankruptcy filings because there was a lot of deferral of charges, delay in payment »notes Jean-Marc Tariant. The implementation of PGEs has created real solidarity between business leaders, financial departments and their bankers. “There was a lot of dialogue and a real closeness. What the crisis has generated is the fact of being united with a common challenge. We go dig into the business model and the company’s needs, how to secure financing and work on the BFR »reports Patricia Morand, director of the Enterprise market at ArkéaBanque E&I, which has been supporting growth SMEs and ETIs since 2018.
Anticipate difficulties and cash
The banks therefore lend as much as before and seem as pleasant with the good files. “A banker who does not encounter new difficulties, cash flow problems, does not change his behavior. I recently accompanied a company under LBO which made losses in 2020. A file which requires debt restructuring and a request for medium-term financing. If the manager and the financial management anticipate the cash and the difficulties to come, there is no problem obtaining the necessary financing »gives the example of Jean-Marc Tariant, a former banker.
Read also: Increase in bank rates: what impact for companies?
What has changed, however, is the increase in the rates applied since the start of the war in Ukraine. Added to the effects of this war are the uncertainties linked to the Chinese economy, in a context where supply difficulties throughout the production chain have persisted since the health crisis. The rise in rates, which does not yet seem to be at the heart of companies’ concerns, could be visible in one or two years.
A geopolitical context which requires increased vigilance on the part of banks, and which could lead to a tightening of credit conditions. “Banking establishments are asking more questions than before about the rise in prices which is influencing the construction sector. They are trying to find out if we can pass on this increase to the selling prices., explains Stéphane Madec. Companies that were already in difficulty before the health crisis, or from highly disrupted business sectors, could be faced with this refinancing problem.
Sustainable development gives new impetus
Sustainable development is also brought into the debates and discussions between finance departments, their investors and their banks. According to Patricia Morand, this subject is even becoming a major element of a company’s dialogue with all of its financial partners and is essential both in management systems and in internal and external control structures. “The crisis has accelerated awareness of the climate issue, of the importance of the societal role of companies for the future, for their image, their teams and recruitment”.
If banks have a leading role to play in help companies move towards CSR loans (social and environmental responsibility), the financial directors are now directly involved in the reflections as well as in the implementation of the approach. “We are very committed to these social and environmental issues. An impetus that is not so much linked to the crisis, but to regulations, standards, the importance of this new CSR dimension for players and investorsexplains Stéphane Madec, who received an impact loan from Bpifrance. If we respect the ESG criteria and objectives, the loan rate is subsidized”. The way in which the company takes these issues into account would already condition the price of silver.
Over time, ignoring this question could even reduce a company’s ability to finance itself. “The CFO must be at the heart of innovations and must be aware that he has a crucial role in make tangible the attractiveness of the company and to articulate a strong discourse on sustainability. It must make it the most attractive to benefit from the best financing and ensure greater attractiveness in relation to the financial world and that of private equity.”concludes Patricia Morand.