Resurgent economy is ripe for business investment
The recovery in the UK economy, so evident last year, has continued into 2015 with strong growth in asset finance in the first quarter, with many businesses keen to use leasing and hire purchase to invest in a wide range of assets.
New asset finance business in the UK grew by 19% in Q1 2015 to £6.9 billion, compared with the same time last year, and total new business in the 12 months to March was also up by 14%, totalling almost £27.1 billion.
The asset sectors which showed strong growth were business new car finance, plant and machinery finance and commercial vehicle finance sectors. IT equipment finance showed the strongest rise, growing by a massive 53% in the same period.
According to data from the Finance & Leasing Association (FLA), the percentage of UK investment in machinery, equipment and purchased software financed by its members increased from 27% in 2013 to 27.9% last year, the highest level for five years.
And the total asset finance provided by FLA members in the 12 months to March 2015 was £27.1 billion – an increase of 14% over the previous 12 months.
There are a number of reasons behind this boom in business investment. British businesses are feeling more confident about the broad economic outlook and their own markets and, as a consequence, are more confident in investing in their future growth.
That means that decisions to update assets in need of replacement are now being taken, rather than being deferred until better times. With the economic outlook is at its brightest since the credit crunch of 2007/8, many companies see this as the ideal time to make important investment decisions.
Investment decisions of this nature typically start with your finance provider, and for many companies, the banks are not necessarily their first port of call. This may be for a number of reasons, but many businesses are increasingly seeking independent means of finance.
Why the independents?
Maxxia is one of a number of independent finance providers that can offer a credible alternative to the banks for many business finance needs, and can provide a long pedigree in the asset finance arena over many years’ experience.
It’s an expert at providing the appropriate funding for a whole series of asset classes, including new vehicles, plant and machinery, IT equipment, printing machinery, agricultural machinery, marine and aviation equipment – and many more.
Asset financing typical covers a variety of lending and payments solutions commonly tied to the assets involved, so it’s important to discuss the solution that best suits your own needs before making that final investment decision.
This may be to optimise your cash flow, take advantage of short term windfalls or spreading your payments over the longest possible repayment period.
What’s the best solution?
Asset finance will usually involve leasing or lease-like structures, such as hire purchase, operating or finance leases, or sale-and-lease back arrangements. Again your finance provider should be able to draw on their experience and expertise to discuss with you the most suitable finance arrangement to meet your needs.
Ideally, they should provide a consultative approach which quickly identifies the key needs of your business. What does your business need? Where is your cash-flow tied up? What are your business aims?
Once these objectives have been clearly identified, your finance provider should work with you to offer the type of asset finance that will help your business do what it needs to do.
Choosing the right provider should give you access to asset finance on a huge array of equipment across a wide array of sectors. And having that degree of experience and flexibility working for you is truly an asset in its own right, and can help you make the right investment decisions for your business.
Is a panel the best option?
In order to find the best funding option for a client, Maxxia has a solution that allows it to take a funding brief and go to market to search for the best finance deals, rather than just offering finance directly.
This option involves the use of a panel of other funders, with Maxxia acting as introducer to several different finance providers. Panel funding in this way is advantageous because the introduction of what is effectively competitive tendering for each and every asset funding requirement means that the client can be assured of the best deal available.
And the advantage of working with Maxxia as the funding manager is that all transactions can be recorded, reported and subject to audit in a totally transparent fashion, regardless of where the ultimate funding is coming from.
A client gets the administrative benefits of dealing with one key partner whilst enjoying the financial benefits of working with many – we think this equates to having the best of both worlds.
If you would like more details on how our approach to asset finance can work for you, please get in touch.