The Analysis News & Opinions
Opinion
Asset-finance market grows by 6% in June
Our new figures show that asset finance new business
(primarily leasing and hire
purchase) grew by 6% in June, compared with the same month in 2018. In the first half of 2019, new business was 8% higher than in the same period in 2018. The commercial vehicle finance and plant
and machinery-finance sectors reported new business up by 10% and 1% respectively compared with the same month in 2018. New business reported by the business-equipment- finance sector fell by 1% in the same period. A strong performance by the asset-finance
market in the first half of 2019 meant the latest annual new-business total reached a record level of more than £34bn. Asset finance continues to be popular with
firms of all sizes. Of the total new finance provided to businesses in the first six months of 2019, more than £10bn went to SMEs – 6% higher than in the first half of 2018. Meanwhile, the point of sale (POS)
consumer-car-finance market fell by 3% in June 2019, compared with the same month in the previous year. The POS consumer new-car-finance market reported a fall in new-business volumes of 5% in June compared with the same month in 2018, while the value of new business fell by 4%. The percentage of private new-car sales
financed by our members through the POS was 91.0% in the 12 months to June 2019. The POS consumer used-car-finance market reported a fall in new-business volumes of 1% in June compared with the same month in 2018, while the value of new business remained at a similar level to June 2018. The POS consumer used-car-finance
market reported a record total for new- business volumes in the first half of the year of almost 772,000 vehicles, while the modest fall in POS consumer new-car finance in the first six months of 2019 was in line with wider trends in private new-car sales.
Geraldine Kilkelly Head of research and chief economist, Finance & Leasing Association
Cautious welcome to plans on late payment
A senior industry figure has given a cautious welcome to the government’s call for evidence in tackling late payment, but warned against actions that may ‘throw the baby out with the bathwater’. Philip King, chief executive of the
Chartered Institute of Credit Management (CICM), said while the possibility of increased powers for the Small Business Commissioner (SBC) was logical, the suggestions of fines and sanctions for transgressors would need further consultation and thought, especially as regards to how any ‘punishments’ would be enforced. He also said that proposals to encourage
SMEs to better utilise payment technology lacked any detail as regards what type of technology was being proposed and how such technology woudl be funded. “Much of what is included in the document
from the Department for Business, Energy and Industrial Strategy is aspirational, and, while those aspirations should be welcomed, it will be the detail that is now important,” he said. He similarly highlighted the proposal to
review the role of supply-chain finance: “David Cameron encouraged supply-chain finance when he was in power, but the problem is that current payment-practices reporting (PPR) can potentially penalise businesses for offering it, so this will need further consideration. It will need to be very clear what the benefits are and how they can be maximised whilst mitigating the risks.” The call for evidence references the Prompt Payment Code, and said that the
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government would consult on how the code could be further strengthened. It also proposes a tougher approach to PPR: “The CICM is already working closely with the SBC and has long advocated the concept of transferring responsibility for the code to the SBC in a phased approach. “Since our remit changed to publish the
names of those suspended from the code, businesses, politicians, and the media have at last been able to see how the code is both a carrot and a stick in driving positive payment behaviours. “If the code has struggled in the past, that
has been principally down to lack of funding and a failure to understands its true purpose and its powers.” In terms of PPR, Mr King said it was
already a criminal offence for businesses not to meet their statutory reporting obligations, so again this would come down to enforcement: “Obliging larger firms to appoint a member of the board with specific responsibility for late payment will support this and help late payment and the treatment of suppliers to move further up the boardroom agenda.” He added: “If adopted in the right way,
these measures and proposals can help drive the change in culture that has been the objective of so much of our work in this area for many years. “We need government to turn words into
the right actions, and we need to continue to highlight that good credit management sits at the centre of so much of what is required to change that culture.”
September 2019
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