FINANCE & LEASING


Lead with leasing after lockdown


As we head towards the end of lockdown, it’s important to look at what the financial implications of the Covid-19 crisis will be and what opportunities might come out of a ‘V’ shaped recession with a quick fall and quick rise. To help with this VI spoke to Tower Leasing’s Kevin Reed.


Financially, for many people, the current situation is extremely concerning, and the second half of 2020 is not at all what anybody expected. Kevin says: “I do believe


that almost all of the vending operators I know are in a strange place but due to the very nature of the industry and its ability to work and support most sectors of the UK marketplace, they have some form of revenue to rely on in these troubling times. “Most UK vending operators run professional businesses with


robust financial structures with fewer operating on the hand-to- mouth basis that we see in some other industries. The government’s support structure on the face of it appears


robust and the furlough scheme, which Kevin describes as “master stroke” has prevented many premature terminations of employment. “It hopefully will allow for many UK businesses and most vending


operators to switch the lights back on and quickly ramp up operations when the bulk of business gets back to work.”


LIFELINE Finance can be a lifeline and a springboard to business during this time, but Kevin urges vending operators and their customers to make full use of the support facilities made available by the government before investigating these options. In particular he


references Grant Funding, Coronavirus Business Interruption Loan Scheme (CBILS), The Covid Corporate Financing Facility (CCFF), HMRC Time to Pay, VAT and Tax holidays. The government has launched a simple locator tool to try to help in an attempt to prevent anyone from falling through the cracks. Access this tool here. https://www.gov.uk/business-coronavirus- support-finder


16 | vendinginternational-online.com LEASING


“Going forwards the vending landscape will temporarily be changed and may be very different as we find our new ‘normal, Kevin predicts. “Historically many vending operators have offered Free on loan, cash box deals and in-house rentals with Tower supporting many ‘back-to-back’ leasing facilities, assisting the working of these deals. “However, where the bulk of revenues are derived from the above


products, problems may arise as there could be little or no cash coming into the business. During recessionary and difficult times, it’s leasing that comes to


the forefront for both operators and their customers. “I would say my most successful operators have been the ones


who ‘lead with leasing’ and have a healthy leasing culture in the business. They sell more equipment and sell more profitability, whilst improving their cash flow. “Of course, there is a place for all the other forms of providing equipment but during times of crisis, be more targeted on the clients you promote those options too and engage your sales team to sell lease. “When customers enter into leasing agreements, the equipment value and profit is paid to the operator immediately. The end user takes on the agreement and pays the leasing company back, generally over a three or five-year period. The operator gets the equipment at the end of the agreement and hopefully sells a new machine to the customer.


SO WHY SHOULD YOUR CUSTOMERS LEASE? • They pay for the equipment as they use it, not up front – who would dream of paying staff salaries three years in advance? Pay as you receive the benefit. • It lowers upfront costs, compared to buying equipment outright, with simple monthly rentals.


• It’s extremely tax efficient and offers an easier way to get the equipment if customers’ cash flow is tight.


• Helps businesses budget more easily – payments are ordinarily fixed. • Immediate access to the equipment your business needs – you can also get a much higher standard of equipment than you might otherwise be able to afford if you purchased it outright.


• Free up other finance options – very important to keep bank credit lines open in difficult times in case of urgent cash flow requirements.


• Very easy to upgrade and renew equipment. • Using a funder with a specialist brokerage arm allows for more credits to be approved – particularly useful at this time.


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