The moving of the goal posts

In this present financial situation that we find ourselves locked into, we are all fully aware that change has hit the leasing industry.

The change is not for the better as all of the main leasing companies have simply picked up the pitch as well as the goal posts, and have moved them twenty five miles down the road.

Large sectors of the market are now almost "no go " areas for the underwriters. Just think that building, construction, motor, retail etc, huge swathes of the economic base of the UK are almost excluded from leasing.

The effect on suppliers of equipment who use leasing as a sales tool is they have been left high & dry. One funder quoted a very large manufacturer last week that unless the customer was either a local authourity or part of the government, they could not accept the risk. Whilst I understand that underwriters have to change their terms, and become more risk adverse, unless they are very carefull they will descend into oblivion.

Let me explain, if you reduce the amount of new business you are writing, the percentage of bad debt on the leasing book has to rise. If you start to put into the equation that deliquency is rising, the percentage of bad debt will rise faster and faster, until someones says enough is enough, and another funder closes its doors.

This coupled with the fact that underwriters are now looking very closely at ratios and net worth of companies, which companies will show growth in their net worth in the next accounting period 08/09? I would expect very few. This will purely exacerbate the problem.

So what is the road ahead? I think as the Beatles put it very succinctly, it will be a long and winding one ! The key is to think outside the box, and seize opportunities that will arise. That is what Oak Leasing has done ( see Leasing Life article)

To see how we can help, just send us an e-mail sales@oaklease.co.uk. We will help you seize the opportunity.

Overcome the credit freeze, with equipment leasing.

We always expect January to be a cold month, as the winds from the North sweep down the country. This year it is not so much as the icy weather, but the increasing credit freeze hits all types of businesses, with no sign of a thaw insight. According to the accountants Deloitte's this morning, 99% of finance directors that they asked, rated credit as hard to obtain. It is this creditfreeze that is driving the recession.There will be no recovery until the credit tap is turned on again.

Accessing credit is now the major worry for most companies. And if you can find credit, the pricing has increased sharply, and its terms are far harsher than they were a year ago. With banks now having a reduced capacity for lending, coupled with a growing fear of rising bad debts, which appears to be justified, the credit freeze has only just started.

So what does the future hold for us all? Well I think that cash flow management will prove to be crucial in the coming months. With companies experiencing growing bad debt on their invoices, and every bad or doubtful debt hitting the bottom line, companies will turn to either factoring or invoice discounting. Both of these options will cost you money. There is a third way, that will not cost you a penny.

If you lead with a lease rental figure on every quote, and lead with a leasing figure in every closing conversation, your leasing penetration will increase, and as you are aware, the leasing companies will normally pay you by either TT or Bacs within 2- 3 days, saving you worrying about the outstanding invoices. In every recession that we have been through in the last 35 years,equipment leasing has always increased, as the suppliers need it for their cash flow, and the customers require it as a new credit line. So it is a win- win situation for both suppliers and customers.

For more information, just visit the UK's most popular leasing company website at http://www.oaklease.co.uk/.

Credit Crunch turns to Credit Freeze.

Just as winter starts, the crunch turns to a freeze, how appropiate. Hear is the news that many people are unaware of, M4 Money ( Private Sector Money) fell to 3.5% year on year in October compared to an average of 9% over the last three years. This is the latest data from the Bank of England.

So what does this mean to you and me? It is very simple, we are now in the grip of a credit freeze. A credit freeze is where the banks or lending institutions show a great reluctance to either renew a credit line or overdraft or reduce the amounts and terms in which they are prepared to offer to you or to your customers. With the banks controlling about 90% of the small business lending market, either through overdrafts, loans or leasing; when they revert to type and cut back as they always do in a recession, it effects all the small business's in a disproportionate way.

Cash flow begins to take a new priority. As more and more of your customers take longer and longer to pay, you are in effect funding their cash flow, and damaging your own. Their is a solution to both parts of the credit freeze. With banks in their current frame of mind of retrenchment, they appear very reluctant to offer new loans or increase overdrafts. This is effecting any equipment reseller.

However if the reseller used equipment leasing, it gives the customer a new credit line and helps in closing the sale. The other main benefit of leasing in a credit freeze is that you will get paid normally by BACS or TT within 24 hours, so the money is in your bank, and not in someone elses, assisting your cash flow.

So the ball is firmly in your court, to help overcome the credit freeze, use leasing, preferable Oak Leasing !

http://www.oaklease.co.uk/ The UK's most popular leasing company website.

And now for some common sense.

The media is discovering that credit crunch news is making people either change channels on the TV or turn off the news. Saturation point has been reached, but they still try to ram it down our throats.

By simply going over the news with slight variations does not mean that it is news. We are all aware of what has occured, and who is to blame. End of story. Move on.

We cannot dwell on what has happened, we have to look to the future. Doom and gloom is no good for any business. If we think that the end is nigh, it surely is, but I think it is high time to be positive and seize the opportunities that are out there.

Historically the strong would overcome the weak, but this time it will be different. Companies who seize the growing opportunities will succeed. It is the quick that will overcome the slow.

We all know that the banks have tightened up their lending policies.We all know that they are reducing overdraft limits, and this is hitting SME's and medium business's very hard and they try to survive. By using leasing, it overcomes using valuable working capital or part of an overdraft to acquire needed capital equipment. Remember standing still is just an illusion, you are going backwards. For any equipment suppliers, you have to use leasing to help sell your equipment and also help your customers survive. Use and promote leasing on your website, it is not an option, it is a necessity.

Getting down to brass tacks, many leasing companies have closed off their leasing books, and have either stopped offering leasing, or have changed their underwriting criteria beyond recognition.

We have the money, you have the customers, lets talk, and get some leasing proposals underwritten and paid out. The quick will survive, the slow will not, perhaps that is what will eventually come of this period on uncertainty.

Oak Leasing Ltd. The UK's most popular leasing company website.

Stormy financial weather ahead.

The British are well known that we talk about the weather. Here is today's forecast. There is a very cold wind blowing across Iceland, with a deepening Atlantic depression moving in an easterly direction.

Any firm that uses equipment leasing as a sales aid to sell capital equipment is being hit by three factors.

Firstly that we are in a recession, and that margins are being cut to the bone, and that customers are postponing any buying decision to a later date. With the stock market plunging again this morning, you cannot blame them for that, confidence has been, and is being shot to pieces.
Secondly, funders are being hit by rising bad debt, and are therefore using tougher underwriting guidelines, and thirdly, many leasing companies have simply left the market place, leaving a huge funding gap for leasing.

And now coming back to the weather forcast,the phrase R&D has changed its meaning,from research and development to recession and not depression. Wednesdays move by the government has meant in real terms that we will go into a recession, and not a depression. That is very good news.

The key is that in a recession, it is crucial not to let any sales opportunity slip through your fingers. Leasing only works as a sales aid if the supplier is receiving full support from its leasing partner, and it becoming apparent to us that many funders are simply cherry picking the deals. This is not sales aid leasing. We at Oak, have sources of funding that will give you the opportunity of acceptances that other leasing companies will simply reject. You cannot risk losing any sales in this present climate.

I hope that when I next write, the tone will be more uplifting, all I can say is make every sale count, and if you are not receiving a good acceptance rate from your leasing company, it would be wise to look for a new leasing partner.

http://www.oaklease.co.uk/ The UK's most popular leasing company website.

Woe Woe & Thrice Woe ?

What a mess the financial world is in. But the journalists are missing the main point. They are all hammering on about the credit crunch, that is very much yesterdays news, the real problem is the confidence crunch.

Banking and finance works on confidence, firstly that the actual system is strong, and that the players or banks are also strong. The acute problem is that at the present, the banks do not have any confidence in each other. Can you blame them when the board will issue a statement saying they are financially sound, ( that in itself should be like an alarm bell) and 3- 4 days later, the same bank is being bailed out by their central bank or sold on to a competitor. It is not as if it is one or two banks that are suffering from this, it is becoming rare that somewhere in the global economy a bank has not failed!

The swagger of Wall Street has long gone, and I think it will take many many years before the rest of us will ever listen to what they are saying about their institutions. The undoubted position as number one has gone, and I think for good, or at least some very considerable time.

So what does the future hold, well I think it is out of the hands of the Central Banks now, it is down to something that money cannot buy....confidence. When it returns,the market will gradually recover, and with that so will the economies. In regard to leasing, many lessors have either closed off their books or are underwriting in such a way that only a very small percentage of business is being placed on their books. Business's will always have to acquire new equipment, and as the banks are very reluctant to lend through the traditional channels, leasing will grow, as it always does in a recession. To use the most popular leasing company website in the UK, simply go to www.oaklease.co.uk

What is a Name ?

Until the last two to three weeks, Fannie Mae & Freddie Mac to most people in the UK could well have been cartoon characters. It is only now that we realise that they were the largest building societies in the world.

The credit crunch is here to stay for at least for all of next year. The reasons is quite simple, between them, Freddie & Fannie own or guarantee about £2.7 trillion worth of home loans - more than half the outstanding mortgages in the US. Almost every bank in the world has some sort of financial involement with them. So when they sneeze, we catch the flu.

The simple facts are that the UK banks are only lending what the savers are putting on deposit, as securitisation has almost dried up. Savers are under huge pressure,you only save surplus money, and as we all know, fuel is up, food prices are up, gas and electric are all rising, and there is inflation hitting everything else. With little money coming into the banks coffers, it is obvious that little money can be lent out to business. Coupled with banks on the receiving end of increasing bad debts, underwriters are now more cautious than ever.

So how does the future look? The only thing we can all do is work smarter, not harder. The internet is the growth area for all companies, or should be. By utilising a website and including a leasing web page is an easy way to help any business work smarter in the coming year. If you want any help on this simply click here