Welcome to the New World of Finance

Business leaders need to look beyond their main bankers

With an almost daily stream of contributors berating the banking system for not supporting UK businesses, especially SMEs, it is extremely easy to get sucked in to believing that the world of finance has simply closed its doors and pulled down the blinds.

Whilst I do not wish for a second to position myself as an apologist for the mainstream banks, many of whom are clearly using various rounds of QE to bolster their balance sheets, I am nevertheless struck by how one dimensional the debate has become.

The world before the recent finance crisis was an entirely different one to the space we inhabit today. By way of example, think back about how much mail used to land on your door mat back then offering loans, credit cards and so forth all gilded with fantastic low/zero interest rate offers. How much of this junk mail do you get today?

The effects were no different in the world of business. The train of credit hadn’t pulled slowly into the sidings; it had come to an immediate and emergency stop. Over the six to twelve months immediately in the wake of the onset of the crisis, we were inundated with stories of legitimate, well-run businesses having their prime banking facilities ‘reviewed’. Inevitably this usually involved slashing of overdraft/rolling facilities and a rocketing of associated banking charges.

The soft underbelly of many businesses had been exposed – for far too long, too many had allowed themselves to become too reliant on usually a limited number of high street banks and the changes sent some reeling into collapse and others have taken years to try to recover and repair their cash flow and finances. Some are still struggling to do so.

It is difficult to be too critical of the proprietors and business leaders affected – after all, the “I told you so” club was a very exclusive one and hardly anyone foresaw the global melt down before it hit. Ultimately however, as with all painful experiences, businesses need to learn the hard lessons of recent history and start to think differently and more creatively about their business finances.

Fortunately for us here at Bluestone Leasing, many UK businesses are doing just that. It is not a coincidence that we have seen significant growth since the onset of the crisis and our figures last month, during a traditionally quieter festive period, were a five-year high.

To a degree much of our activity has always been educational – the benefits of using leasing (whether your focus is tax savings or simply budgeting and spreading costs) have always been extremely tangible and robust to interrogation but many businesses have often not used leasing at all or at best occasionally for vehicles or plant and machinery. Customers often don’t realise that pretty much all capital expenditure can be leased including less tangible assets such as software or even the full fit out costs for new offices or refurbishment.

Perhaps the greatest hurdle to overcome has always been a cultural one. The UK has a peculiar attitude to assets and ownership distinct even from that our nearest European neighbours let alone our cousins in the US. Dealing with an emotive response is always trickier than a logical/technical query given that is comes from the gut rather than the head.

I think businesses are genuinely waking up to the new world of finance and taking a much more strategic view on how they deploy their capital and access external funding. For many, asset finance is forming not just a peripheral piece of that jigsaw but a core component of how they move forward.

Using Bluestone Leasing provides them with access to the largest independent funding panel in the UK and delivers two significant advantages. Firstly our specialist banks decrease their dependence on their primary funders (once bitten twice shy) and equally importantly secure credit that their historic lenders of choice cant or wont.

Naturally asset finance would only form part of any solution which is one reason why we also offer cash flow finance and commercial mortgages. Equally credit is not always straight forward, especially given the difficult trading conditions of the last few years for many, but we have an expert team with huge experience of getting even very challenging projects to happen.

I would challenge many of those businesses bemoaning the availability of credit in the current market to broaden their horizons beyond the limited vista of their primary funders. The world of finance may have felt like it stopped when the US housing market bubble burst in 2007 but for businesses prepared to look beyond their main banks, there is a vibrant and healthy future for their finances.