Mike Randall, chief executive of Close Brothers Asset Finance believes the asset finance industry is in a unique position to support SME growth aspirations as they navigate their way out of the economic mire
The tentative prospect of economic recovery has brought with it a sense of optimism that has been sadly lacking over the last half decade.
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While we shouldn’t get carried away with the media hype, now would be an opportune time to make sure that, as an industry, we are prepared for the imminent influx of customers planning to raise capital.
Signs are indicating that business activities could resume at a pace that we have not experienced since pre-2008. Firms are starting to consider opportunities that have been too risky until now, and will need the funding to take advantage of them.
Some large banks are even advocating asset finance over conventional loans, which is a glowing endorsement and proof that we have been positioning our products and services to best meet the interests of UK industry.
But we must not be complacent if we truly want to penetrate the remaining market share.
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By GlobalDataThere is still an element of the business community whose compass steers them towards the more traditional forms of lending, or who don’t know there is an alternative.
The latest results from the quarterly Close Brothers Business Barometer show that only 44% of UK SMEs know what asset finance is. When asked if they would consider using it to ease cash flow, 54% said no because they were worried about risking their assets.
These are the people whose perceptions we need to change by raising their awareness of our products and services as a sustainable finance solution.
Addressing this gap in our potential clients’ financial knowledge is perhaps the most fundamental step we can take towards reaching our full potential as an industry.
Confidence is seen to be at its highest since 2011, but for every business owner and manager that feels empowered by the talk of improved horizons, there will be just as many that are unconvinced that now is the time to strike — preferring to let others test the water first.
There is even a risk that the early signs of recovery will encourage some SMEs to over-promise as business starts to increase. This could cause huge difficulties for the company if it does not have adequate resources to fulfil these contracts.
While we don’t want these companies to find themselves in the wake of their competitors, we equally don’t want to encourage the type of reckless borrowing that landed the economy in trouble in the first place.
It’s about striking a balance between pushing forward and remaining stagnant. With this in mind, we must remember that all eyes will be on us, the lenders, in the coming months.
We must match and manage customer expectations so that they are assured of getting the most from the transaction. Repeat custom is imperative and could put asset finance at the centre of the market.
If we can prove across the board that we are ready and willing to help people achieve their business goals, and can provide a timely service that is tailored towards our customer’s needs, we can’t go wrong.
Mike Randall is chief executive of Close Brothers Asset Finance
