SFS’s report, ‘Putting Capital to Work’ says that the main
European economies (Germany, UK, France and Spain) and the US have
spent €409bn on the purchase of business equipment, instead of
acquiring that equipment through a financing plan that would free
up working capital for investment in other, growth areas.

In the European economies specifically, the report found that
€265bn was frozen in 2007 due to large outright purchases of
equipment such as plant, vehicles and general business resources.
Leasing and rental agreements were proposed as the main
alternative. A further €215bn of cash was trapped in late invoice
payments, which could be relieved through other financing options
such as invoice discounting and factoring, the report said.

Jonathan Andrew, head of commercial financing, Siemens Financial
Services (Europe and Asia Pacific), said: “In economic terms, the
current environment may be regarded as a much needed return to a
more equitable correlation between borrower risk and lending rates.
As a result, companies are having to look for alternative sources
of finance to replace the tightening availability of credit, and to
free up ‘frozen’ working capital for more efficient and effective
deployment.”