In spite of the uncertainty surrounding the UK economy as a whole and its ability to sustain any degree of recovery, certain industries are bucking the trend.
 
 
In spite of the uncertainty surrounding the UK economy as a whole and its ability to sustain any degree of recovery, certain industries are bucking the trend.

Addressing the Knowledge Gap

In spite of the uncertainty surrounding the UK economy as a whole and its ability to sustain any degree of recovery, certain industries are bucking the trend.



Mike Randall

Mike Randall

After 28 years experience, after starting at the coal face and benefitting from all aspects of the leasing industry over time including credit, arrears, lending, operations, sales management and leadership, Mike Randall was appointed CEO of Close Brothers Asset Finance 18 months ago.
Mike Randall

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Introduction from Executive Producer CHRISTIAN ROELOFS
Mike Randall,
CEO of Close Brothers Asset Finance says that perceptions must change in order for businesses, and especially SMEs,  to understand that they have access to cash by means other than the traditional bank loan and overdraft.

Who should be interested in this?
Asset finance professionals, lenders, SME businesses, advisers and policymakers.

 

Addressing the Knowledge Gap

In spite of the uncertainty surrounding the UK economy as a whole and its ability to sustain any degree of recovery, certain industries are bucking the trend.

The latest data from the Finance and Leasing Association (FLA) shows that asset finance investment grew 15% during the second quarter of 2013, shrugging off the 10% contraction in the first quarter.

The encouraging signs are that new business grew virtually across the board – in the plant and machinery, commercial vehicle, IT and business equipment sectors – leading to confident expectations for continued growth during the remainder of 2013 and into 2014. Such market confidence is boosted by the fact that mainstream bank lending shows little sign of picking up, leading more companies to turn to leasing.

This is reflected in activity at Close Brothers Asset Finance. While funding lines are not back to ‘normal’ yet, we are seeing solid demand, good growth and people buying into our promise that we are in the relationship for the long haul. This is demonstrated in the loan book growth in all our sectors, particularly manufacturing.

However much more needs to be done around education and general profile- raising of our industry and its products. According to the most recent Close Brothers Business Barometer*, 35% of businesses polled cited access to cash as their biggest concern in the year ahead. Yet almost two thirds (62%) wouldn’t consider using asset finance to improve their cash flow with 22% saying they thought it was too expensive, 17% admitting they didn’t know what it was and a further 10% claiming the product was too complicated. More than half of those surveyed didn’t understand the meaning of ‘Sale and HP back’ and of the 30% who had heard of it, one in five said they needed more information before they would consider using it as a means of releasing existing capital for their business.

So clearly there is a financial knowledge gap that needs to be addressed. Perceptions must change in order for businesses to properly understand that they have access to cash by means other than the traditional bank loan and overdraft.

Banks, professional and financial advisers, Government agencies, and the media all have their role to play in ensuring SMEs – who make up 99 per cent of private sector enterprises – have all the information necessary to make informed financial decisions. We also need to see more people choose asset finance as a career. The Leasing Foundation has identified that we “need to build an education, training and development framework” around asset finance and I couldn’t agree more.

Only once we improve the understanding of our industry from a grassroots level up, can the asset finance industry reach its full potential.

Note
Close Brothers Business Barometer is a quarterly gauge of business sentiment on a number of financial issues at any given time

CC BY 4.0 Addressing the Knowledge Gap by Mike Randall is licensed under a Creative Commons Attribution 4.0 International License.