The Summer seems to have gone, Greece is well and truly kicked into the long grass, so far in it will take an archaeologist and a combine harvester to find it again! So what is happening in the UK, well let’s see if we can clear the fog.
In the last month, there have been two recent surveys, the first by Aldermore Bank, who discovered that 51% of SME’s were worried about their business. The second by Hitachi Credit ,only a couple of days ago, showed that 46% of business were concentrating on stabilising their business, before thinking of growth. Stabilisation quickly can move to entrenchment, and then to stagnation. Since 2005, according to the Office of National Statistics, there has been a “chronic underinvestment in manufacturing” the amount is about £8.4 bn. So the last ten years, we have lost a decade, whilst companies in the Far East , and parts of Europe have grown.
The question is simply , why? Well according to a report by the Department of Business in 2013, they concluded with the following, “Although demand is also probably subdued, there is a high level of discouragement from application for lending as well as high rejection rates and margins on credit after controlling for risk. If the situation is not resolved, output, investment and employment will be lower than would otherwise be the case, with adverse effects on economic performance in the short and longer term”
After years of reduced lending, it is only this year where bank lending has risen slightly to SME’s. The British Chamber of Commerce yesterday said” However, our business finance system is not where it could or should be, and some of our most promising young companies still struggle to get the finance they need to grow”
So if the UK market is not moving quite as we would like, how are our exporters doing? Well you guessed it, in it’s annual International Trade Survey, the BCC found that 24% businesses are reporting difficulty in accessing trade finance or credit insurance. However, leasing was not even considered, the thought of an European lease programme was, and is almost an unobtainable goal, just a mirage. To overcome our large trade deficit, we have to export, and to export, we have to invest, and to invest, we must have access to funding. Hardly rocket science!
Leasing has historically always been one of the forgotten arms of funding for business, overdraft first, bank loan second, and perhaps third, HP next, leasing a very poor fifth. It has normally been a supplier led funding source, but with the retrenchment of many supplier companies, this has led to a reduction of business.
Unless we understand what is going on in the economy, we will be unable to help provide the solution that it requires. Oak tries to look and understand what the figures really mean, without the hype, without the gloss. This helps us understand both the customer, and the suppliers. This year, we have launched a major European vendor programme for a US company, who are market leaders in their field.
This has not been easy, but in doing lease presentations both in Germany and France, they have been able to offer a finance option to their customers. There are a number of other UK firms this year that we have also helped by selling their equipment into Europe, by using a lease option, but obviously, we have not reached enough companies.
So as we approach the Autumn, let us approach all of our suppliers and customers alike, and push leasing and promote leasing as a very viable funding option that all companies, new and established, can use to help their growth.