In the spirit of CROSSHIRE
Rental Rate Roy reflects on what he considers to be a pointless and Dickensian piece of red tape.
COMMITTING FRAUD?
I’ve always wanted to write such an attention-seeking headline grabber, akin to ‘Freddie Starr ate my Hamster’. So, there it is…. and now that I have your attention, do you want to hear more? Well, dear reader, let me tell you the story.
My small independent hire company relies on asset finance to assist in the purchase of those big, shiny, brightly coloured things which we endeavour to get out on hire for nowhere near enough money to unappreciative, knuckle-dragging Neanderthals whose seeming sole purpose in life is to destroy said equipment, cover them in paint or concrete, and then take liberties in respect of payment, which is of a similar timeframe to that of the gestation period of the Galapagos turtle!
The issue is that there seems to be a small section in the Terms and Conditions of every asset finance company whereby said assets are not to be sub-let to third party hire companies. In layman’s terms: we are not allowed to cross-hire them. Now, my business derives around 10% of its income from cross-hire. And I know of bigger companies who offer a national service and have whole departments dedicated to this activity.
There are others who have employees permanently implanted in other hire businesses solely for the benefit of this facet. In fact, the UK access industry is home to two independent cross-hire associations, who solely exist to allow their members to offer a UK-wide service to their clients working throughout the country. Now, whilst one appreciates that the national hire companies probably don’t use asset finance from some little independent broker who has his office above a chip shop on the high street, smaller local hire businesses might well use finance houses and brokers.
It seems that this is something of an elephant in the room, in that the funders don’t want to talk about it, albeit that they must be fully aware it goes on. I raised this matter with John, our excellent Account Manager with a major UK finance company and he promptly attended a meeting to discuss it. He addressed the issue with his organisation’s Head of Funding, the Head of Risk and the Head of Underwriting all at the same time. Every one of them apparently shuffled uneasily in their chairs, avoided eye contact and wanted to change the subject. Most amusingly, John said he felt like the character portrayed by Jack Nicholson in the film ‘A Few Good Men’ where, under cross-examination, he shouts, “You can’t handle the truth!”
However, the serious point is that any hire company that finances its assets and derives business from re-hire may well be falling foul of this Dickensian rule, and effectively - and unwittingly - committing finance fraud. My observation to our primary funder was that their risk was obviated by the fact that we were insured in the event of the asset being lost/stolen, and also that we insisted on seeing a current copy of the third-party hire company’s Hired-In Plant Insurance policy.
Methinks it is about time that the finance houses looked to review this clause. It seems pointless to have it, only to then have every member of their staff conveniently ignore it or pretend it doesn’t exist. I, for one, am not prepared to ignore re-hire as a revenue stream. Are you?
ARE YOU
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