2023 Issue 1
A Scotland based tree surgery business acquired the assets they needed to keep up with growing demand
Diving into the surveyed statistics of Scotland
I'm delighted to bring you the latest news from the Scotland business. As always, it offers an insight into the current issues affecting Scotland SMEs, whilst also showcasing how Close Brothers Asset Finance has supported businesses and will continue to do so.
We start this issue, on page 3 with a case study looking at a Scottish tree surgery who to grow their business needed help acquiring new machinery
We pride ourselves on not only knowing about asset finance and being able to tailor suitable financial solutions, but our specialists have also worked within the industry themselves.
By working closely with businesses, our team of industry experts see the potential for growth and provide straightforward asset finance solutions to support this.
Asset finance is an alternative form of funding used by businesses to obtain the equipment they need to grow. In effect,
it utilises the residual value in an asset to either pay for or put down a deposit on another piece of kit. Our experts consider all aspects of a customer’s business and then recommend asset finance solutions that best suit their cash flow and long-term goals.
Common examples of the asset finance products we offer are Hire Purchase, Refinancing (Capital Release), Finance Lease and Operating Lease.
To find out more about any of the finance options we have to offer and how they could work for your business, contact the team today on 01355 888 314
On pages 4 and 5 you’ll find our Business Sentiment Index; our confidence tracker based on business owners’ views and thoughts on the industry. This update will look at how confidence has fallen across all sectors including Scotland, in part due to the rising cost of doing business.
On page 6 we have a Q&A with Neil
Davies, CEO of our Commercial Division. Neil talks about the year ahead given the headwinds many businesses are facing at the moment.
Finally, on page 7 we have our ‘Meet the Expert’ feature. Julie Fisher is a Regional Sales Manager within our Scotland team. In this edition you can find out about her work history and the favourite part of her role.
We hope you enjoy the read and as always, we look forward to working with you in the future.
Jackie Cooke Managing Director of Close Brothers Asset Finance in Scotland
decision making is key when it comes to helping our customers – find out how Close Brothers Asset Finance helped a Scotland based tree surgery business acquire the assets they needed to keep up with growing demand…
Our customer is a well-established family-run tree surgery business, located in Scotland. They offer a range of tree care and removal services including tree surgery, hedge work, tree felling, tree pruning and stump grinding. The business has a wealth of experience and they have built up a loyal customer base over the years.
Demand for logs has increased recently and in order to keep to up with demand, the business needed to purchase new machinery. This new machinery included a firewood processor and a midi-log deck, both of which would increase the businesses production capabilities.
After reviewing all the available options, the business opted for a Hire Purchase agreement. This allowed the business to acquire the new equipment whilst being able to spread the cost by paying for it in instalments over the agreed term.
Thanks to the quick decision-making and simple solution from Close Brothers Asset Finance, the customer has been able to get the new equipment they need to increase their production capabilities. This will allow them to keep up with the growing demand for logs.
Hamish Malcolm, Area Sales Manager commented: “Helping businesses to acquire the equipment they need to grow is always a pleasure. In this case we were able to put together a funding solution that suited the business and their cash flow.”
Our customer said: “The result has been fantastic for our business - our sales have quadrupled during the past 12 months and we are now selling over 2,500 cubic metres of firewood a year.”
“The new machinery has enabled us to split logs much quicker and to be far more cost-efficient by reducing the amount of breakdowns and therefore decreasing any downtime. I would definitely recommend speaking to Close Brothers if you have any asset finance requirements.”
Our data reveals that over the past year, positivity has fallen significantly from record highs to levels not seen since the first lockdown – and what we are seeing for the first time is the sectors aligning around a smaller spread of figures than we usually see; it’s clear the pain of the rising cost of doing business, recession, interest rate rises, energy prices and inflation is being felt across all industries, from construction to services.
According to our research, Scottish business owners’ top five concerns were:
1. Inflation
2. Energy costs
3. Interest rates
4. Tax / VAT
5. Materials supply
Energy costs were seen– by some distance – as the largest inhibitor of growth for the UK’s SMEs; full list:
The one positive is that, overall, nearly three quarters of Scottish firms are still looking to seek funding for investment in the next 12 months, up from 67% in July. This is reflected across all key sectors, with the most notable rise coming in Services, where the number of firms planning to seek funding has risen by 32%.
Q Does your business plan to seek funding for business investment in the next 12 months?
The number of companies missing business opportunities due to a lack of available continues to rise, with half (July: 35%) admitting to having lost out.
With pressure on cash flow, most ambitious businesses rely on additional finance to enable them to invest in growth.
Q Have you missed a business opportunity in the last 12 months, due to lack of available finance?
Scottish business owners are, unsurprisingly, more negative than positive about the macro-economic outlook and it’s this indicator that has contributed most to the decline in the overall BSI; for example, in November 2021 65% of respondents in Scotland were positive about the economy – by Q1 2023 this had fallen to just 39%.
Concerned that the economy will slow down
I don't think there will be a significant change in the economy
Predictions about future business performance is largely unchanged, with the majority expecting their prospects to remain unchanged.
QIn general, how do you expect your business to perform over the next 12 months?
The BSI is based on the views of 900 business owners and senior members of the UK’s business community and calculated from data charting their:
• Appetite for investment in their business in the coming 12 months
• Access to finance and whether they’ve missed a business opportunity through lack of available finance
• Views about the UK’s economic outlook
• Thoughts on their likely performance in the coming 12 months
As far as starts to the year go, it’s been a strong one. We’ve been confirmed in the latest Asset Finance Europe 50 report that we are – again - the third largest asset funder in the UK and that we are the only ‘traditional’ UK funder on the list to have grown.
To quote from the report: ‘In the UK, banks were responsible for much of the reduction in receivables, as four out of five recorded declines; only Close Brothers reported gains’. And, at 8.7% growth, we are the fastest growing asset finance company in the UK of those on the list, and 8th in Europe by % increase in receivables.
But, more than anything, what this demonstrates is our continued strong support for the UK and Ireland’s SMEs during what has – for many – been very difficult times.
A key message I want to communicate – and will be repeating throughout this year – is that our doors remain open to both new and existing customers – we are proud of backing businesses throughout all economic cycles, and will continue to do so.
While we would like to focus on the positives, it would be remiss of me not to acknowledge that businesses face an almost unprecedented number of headwinds – our detailed research findings indicate:
Energy prices:
• 70% of firms have reported a rise in energy costs in the past six months
• 63% say their profitability has been impacted by rising energy costs
• 47% of businesses have taken additional finance to cover their increased energy costs
• 48% of SMEs have experienced cashflow issues
• 83% of businesses have had to either fully or partially pass on additional costs to customers, fuelling inflation
• For 44% of respondents, rising business costs are the biggest concern about the future of their business
Inflation:
• 72% of firms have been negatively impacted by rising inflation
• 62% have raised staff wages to help employees keep pace with the cost of inflation
Knowing this helps us understand in the detail the issues our customers are facing, and we can put in place plans to work with them to ensure they can continue to meet their commitments; however, we do anticipate arrears will inevitably increase.
One positive is we expect supply chain issues to ease, based on the feedback we’re getting from our research, where it’s fallen down the list of concerns business owners are facing. While we have a good handle on the current set of issues, recent events have highlighted just how difficult it is to predict – and plan –for the next challenge.
As a division, we grew our loan book and profitability despite the backdrop of heightened market uncertainty, continuing to focus on delivering disciplined growth, and because of this we are well positioned to successfully navigate this challenging period. Our proven and resilient model, strong financial position and deep expertise enable us to continue supporting our customers and clients.
This is a key message for our nearly 32,000 customers - and one I cannot stress this strongly enough – we aren’t going to stop
providing funding just at the time businesses need it most.
Inclusivity, diversity, equality and social mobility are issues very close to my heart because I know that with diversity (cultural, ethnic, racial, gender, sexual orientation, etc.) comes the gifts of creativity, new ideas and different ways of working. Creating an inclusive culture where all colleagues are supported to thrive is fundamental to the continued success of our business.
We rely on our people’s expertise in delivering excellent service and building long-lasting relationships with our customers, clients and partners, all based on trust and integrity.
We want our colleagues to feel as though Close Brothers is a great place to work and are signatories to a wide range of charters and commitments across a broad spectrum of inclusion themes and social enterprises, including:
• The Race at Work Charter (our target is to have at least 14% of our managers to identify from an ethnic minority background by 2025)
• The Social Mobility Pledge,
• Women in Finance Charter
• The Valuable 500
We also partner with leading diversity organisations, including Stonewall and the Business Disability Forum, to help inform our thinking and subsequent actions. We are committed to inclusive recruitment practices, using gender decoders to avoid the use of gender bias wording in adverts and job descriptions, and seeking balanced shortlists and diverse interview panels to alleviate bias in the process.
Julie Fisher is a Regional Sales Manager and industry specialist within our Scotland team. Here she shares her journey to Close Brothers and the favourite part of her role.
Tell us about your role and your current responsibilities…
My current role with Close Brothers predominantly involves helping Showmen all over the UK by providing bespoke packages that suit their needs to purchase their fairgrounds rides, kiosks and transport. The Showmen community prefer a personalised relationship where long-term trust is built, which is something Close Brothers can provide. Many customers are part of family operations which have been established for many decades and in which several different generations are still involved in running the business.
In this role I have learnt a lot about the close knit and supportive Showmen community and gained knowledge about their business, opportunities and growth. I have been able to assist with the difficult times which lockdowns have brought to the industry and have also been able to learn about the history of the Showmen’s Guild which was founded in 1889.
What was your journey to Close Brothers?
Before I joined Close Brothers, I was in the Royal Air Force for 12 years, an incredibly significant period of my life which I thoroughly
enjoyed and enabled me to travel to and live in Cyprus and the Ascension Islands. In the RAF I formed lifelong friendships and gained skills and confidence which have helped me take on new challenges ever since.
When I left the RAF, I did some temporary work which led me to Close Brothers. I had never worked in finance before and started at the Glasgow Office in an administrative role, I then transferred to Business Development, then to Area Sales Manager and now I am a Regional Sales Manager.
Since joining Close Brothers, I have never looked back and have been grateful for the opportunities to enhance my career and for being part of such an excellent, friendly team in Glasgow.
What is it about working for Close Brothers that is different?
I think working for Close Brothers gives you lots of experience in many different sectors. Prior to dealing with the Showmen community, I dealt with various large and small businesses including hauliers, coach companies, taxi companies and manufacturing firms which widened my knowledge of the finance sector. The diversity and challenges always make the job more interesting.
What’s your favourite part of your role?
The favourite part of my role is going out to meet customers and ensuring the finance package suits their requirements. The Showmen’s business can be very seasonal, so it is important to get the structure of their finance packages right from the start.
During the pandemic one, particular customer would have lost their business if we hadn’t managed to restructure their deals with a suitable payment profile until they were operating again. Business was effectively wiped out due to COVID-19 with cancelled fairs and events. Unfortunately, this wasn’t the only family business put in this position, but others did manage to secure other jobs to bring in some income. I am pleased to say that all of my customers’ businesses survived those unprecedented times.
In my teens I was Majorette Champion of Great Britain in various individual and team events but my proudest achievement was the double baton solo.
