Streszczenie:European businesses have ambitious growth plans but risk missing out on new international opportunities unless they restructure their finances, according to a new report issued today from HSBC and PwC (previously PricewaterhouseCoopers). The report, “Forward Thinking Finance: The Growth Challenge”, has identified that €120bn is sitting untapped on the balance sheets of Europe’s businesses which could be used for growth.

Growth requires investment

Many firms are looking to deliver double digit growth over the next year. However, according to HSBC and PwC’s experts achieving this goal will require a change of their attitude towards financing of their business. “The same applies to Polish companies, many of which rely on self-financing. This phenomenon was very well visible at the end of crisis, when companies where reluctant to draw credits despite improvement of market conditions and bigger openness of banks towards credit financing”, says Paweł Kusiak, Head of Commercial and Global Banking at HSBC Bank Polska SA. What can be observed now is a systematic growth of demand for credit among companies, which is reflected in National Bank of Poland’s data. Firms more and more often use investment credits due to the growing use of production capacity that requires planning new investments to increase competitiveness of their products as well as their market share.

Entrepreneurs usually draw credits for modernization of their machine parks, extension of existing production lines, storage base or logistic systems. In most cases they’re unable to finance these investments themselves. The current state of economic cycle as well as moderate valuations of stocks provide also mergers & acquisitions opportunities that are externally financed to a big extent. “One of the biggest weaknesses of Polish private sector is the shortage of capital, which is very often a barrier to growth that could be possible due to post-crisis opportunities in the EU and USA. Financing is no longer a goal as such but a part of managing the company value”, says Piotr Zdrojewski, Director in the Advisory Department of PwC, responsible for advisory in acquiring financing. “In some industries there’s an outflow of strategic investors next to progressive privatization. There are a lot of finance restructuring projects and there will be more of them”, adds PwC’s expert.

It’s not enough to replace self-financing by credit

The change of attitude towards financing should include not only replacing self-financing by credit financing but also increased use of other products enabling effective management of company’s finance. “We’re observing a growing interest in factoring that can be an interesting alternative to operating credit that is a very popular solution among Polish companies. What’s more, firms more and more often use different kinds of bank products for cash management, trade financing as well as protection against currency risk purposes. Companies’ response to the launch of our RMB settlements offer reflects the fact that they more and more often analyze the question of currencies they use in trade settlements”, says Paweł Kusiak. Polish businesses’. Polish businesses’ attitude is changing both in the case of short-term and long-term financing. Growth strategies more and more often include financing investments not only from investment credits. “The interest in corporate bonds is growing, both domestic ones as well as Eurobonds”, adds Piotr Zdrojewski.

However, experts of both HSBC and PwC appeal for prudence in the process of selection of instruments they use to finance business operations and growth. In this process firms should select only these solutions which mechanism they understand and which advantages & disadvantages they know. “The crisis has cost a lot and taught Polish companies a lot. Currency options were an important lesson. Turmoil on the market was a test of operational and financial risk management of companies and the quality of financial institutions’ business. Options showed considerable defects on both sides”, says PwC’s expert. “We’re now at the beginning of ‘spring’, when it’s still dark and cold; but when the ‘summer’ comes the winners will be companies that have already started preparing themselves for financing and refinancing their business”, adds Piotr Zdrojewski.