Inside Newsletters - Scotland - March 2024

Business Sentiment Index

Diving into the surveyed statistics of Scottish SMEs

Meet the Expert

Meet our industry specialist, Cameron Robson, Regional Sales Manager

Welcome to Inside Scotland

I’m delighted to bring you the latest news from the Scotland business. As always, it focuses on the current industry trends and how they are affecting SMEs, whilst also demonstrating the support Close Brothers Asset Finance has offered to businesses within the industry.

We start this issue on page 3 with a case study looking at 1st Vehicle Hire Ltd. We have worked closely with this company over the past couple of years, assisting them in funding several vehicles including a Ford Transit minibus.

We pride ourselves on our ability to provide tailormade finance agreements that are suitable for individual businesses. Our teams are specialists in their field, with many having worked within the industry themselves.

By working closely with you to understand your business, our team of industry experts see the potential for growth and can provide straightforward asset finance options to support this.

Asset finance can help businesses of all sizes get the equipment, vehicles and machinery they need. All without having to

pay the full price upfront. It can be used for both new and second-hand assets, or as a way of releasing the value from those you already own.

Common examples of the asset finance products we offer include Hire Purchase, Refinance/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 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 we are seeing a cautious return to confidence amongst some Scottish SMEs, particularly about the economic outlook.

On page 6, we have a case study on Loop Recycling Ltd. We worked with this prominent Scottish waste management company to fund a new bin lorry for their growing business.

Finally, on page 7 we have our ‘Meet the Expert’ feature. Cameron Robson is a Regional Sales Manager and industry expert within our Scotland team. Here he discusses his predictions for the next 12 months across the industry and the favourite aspect of his 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, Scotland

Case study:

Scotland vehicle hire company releases funds through minibus refinance

Glasgow based hire company 1st Vehicle Hire Ltd was established in 2015. Since being acquired in 2022 by Declan Bryce, the business now operates under the Practical Car and Van Rental brand which is the fourth-largest vehicle rental company in the UK. The business has approximately 60 vehicles in its fleet including vans, cars, campervans, motorhomes and minibus for hire to customers across the Glasgow area.

A growing demand

Recently, 1st Vehicle Hire Ltd identified an increased demand for minibus rentals, particularly for weddings and private hires. To fulfil this need, the business purchased a Ford Transit 17-seater minibus outright. However, recognising the potential of releasing capital from this purchase to fuel further expansion, the decision was made to refinance the minibus. For assistance with this refinance, Declan got in touch with Kevin Byrne, Regional Sales Manager for Close Brothers Asset Finance.

The suitable agreement

Over the past year, the business has expanded and diversified their fleet through multiple finance agreements with Close Brothers Asset Finance. For the refinance of the minibus Kevin proposed using a Sale and HP back agreement. This offered the

company manageable repayments, which are generated by the minibus being hired out, whilst releasing the capital into the business.

A position for growth

By making the decision to refinance the minibus, 1st Vehicle Hire Ltd were able to invest the released capital into its operations, paving the way for enhanced service offerings. With a strengthened asset base, the company is poised for sustained growth in the competitive vehicle rental landscape.

Kevin Byrne said: "Working closely with 1st Vehicle Hire Ltd has been a great pleasure, the company's commitment to innovation and growth is inspiring. Our goal is to empower businesses to thrive and seeing the positive impact of this refinance agreement is extremely fulfilling. I look

forward to working with Declan on further agreements in the future."

"The assistance provided by Close Brothers Asset Finance has been instrumental in our journey towards expansion. By refinancing the minibus, we were able to release funds to reinvest back into our business and further solidify our position in the market. We would certainly look to work with Kevin and his team at Close Brothers Asset Finance if we needed further finance in the future." Declan Bryce, Director, 1st Vehicle Hire Ltd

Our team are specialists in their fields and experts in asset finance. Contact the team today by calling 01355 888 314.

Cautious return to confidence on economic outlook for Scottish SMEs

At Close Brothers Asset Finance, we have a long history of commissioning independent research to ensure we understand what business owners’ priorities are. In this article, we take a closer look at Scottish companies’ views on four key metrics:

• Appetite for investment in their business in the coming 12 months

• Access to finance and whether firms have 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

Appetite for investment

In line with the UK as a whole, Scottish firms’ appetite to invest fell (from 77% in September 2023 to just 59% in January 2024), indicating a softening in investment confidence.

From a sector perspective, all experienced a drop in sentiment in this marker – significant in some cases, as with Services (71% to 59%) – apart from Transport and Haulage - where the percentage of firms wanting to invest improved from 62% to 77%.

Q Does your business plan to seek funding for business investment in the next 12 months?

Missed opportunities

The number of companies that have missed business opportunities because of a lack of available funding rose for Scottish companies, putting them on a par with their counterparts from other regions. Even so, this latest figure is in line with the more normalised levels achieved for this question, last seen in May 2022.

At 41% (Sept 2023: 26%), Transport & Haulage saw the biggest difference in sentiment, when compared to the previous research period.

Q Have you missed a business opportunity in the last 12 months, due to lack of available finance?

Economic outlook

Confidence in the macroeconomic outlook among Scottish SMEs has improved significantly in 2024, with 52% confident the economy will grow in the coming 12 months, compared to 38% in September.

However, while this is a step in the right direction, it’s worth remembering that in November 2021, 75% of respondents were positive about the economy, which means we are still some way off previous highs.

Q

How would you best describe your business's economic outlook for the coming 12 months?

Predicted business performance

Predictions about future business performance rose slightly, in line with the rest of the UK. What hasn’t changed is that most firms expect to continue treading water in 2024, with their prospects remaining unchanged.

Q

In general, how do you expect your business to perform over the next 12 months?

Our view

Matt Roper, CEO of Close Brothers’ Commercial business, said: “The recovery in confidence, albeit cautious, among the UK’s small and medium business owners continues, is clearly positive news."

“However, our research reinforces the feedback we’re getting from the stakeholders in our key sectors that the recovery in sentiment very much depends which industry they operate in."

“Our commitment to the SME community is that we will continue to work with firms through the cycle, providing expert advice and building long-term relationships, as we’ve always done.”

Case Study: Scottish recycling business secures new lorry through Hire Purchase agreement

Loop Recycling Ltd, a prominent waste management company established in 2019 by Directors Paul Frazher and Vari McGale, has significantly expanded its fleet of waste disposal vehicles with a tailored finance agreement provided by Close Brothers Asset Finance. Leading this partnership is Regional Sales Manager Kevin Byrne, who has maintained a strong rapport with the family for eight years.

Business Growth:

Loop Recycling Ltd specialises in collecting and disposing of waste for commercial premises across Glasgow and due to high demand have now expanded their operations to include Edinburgh. The company boasts an impressive portfolio consisting of more than 1,200 contracts with retail and bar establishments and continues to grow.

Collaboration with Close Brothers Asset Finance:

Kevin Byrne has assisted Loop Recycling Ltd in acquiring a DAF LF55 Bin Lorry, which has proved vital in their expansion into Edinburgh. This essential asset was acquired through a comprehensive Hire Purchase agreement. By using Hire Purchase the business has been able to

spread the cost of the new waste disposal vehicle over fixed monthly repayments.

The business also utilised our VAT deferral product, which helped Loop Recycling Ltd postpone the VAT payment on the vehicle, providing them the flexibility to manage their cash flow.

Fleet Enhancement:

Using a tailored finance agreement, Close Brothers Asset Finance has allowed Loop Recycling Ltd to strategically expand its vehicle fleet, effectively meeting the demands of their growing clientele in Edinburgh and Glasgow.

Kevin Byrne commented: "Working with Paul and Vari has been a pleasure. With the tailored finance agreement, they were able to purchase the DAF LF55 Bin Lorry,

expanding their business into Edinburgh. I look forward to working with them more in the future on further agreements."

"Close Brothers Asset Finance has been instrumental in supporting our growth. The Hire Purchase agreement, coupled with the VAT deferral product, provided us with a flexible and tailored financial solution. Their commitment to understanding our business needs has strengthened our partnership and contributed to our success." Paul Frazher, Director of Loop Recycling Ltd

Contact the team today by visiting closeassetfinance.co.uk/ enquiry-form

Cameron Robson Regional Sales Manager Meet the Expert

Cameron is a Regional Sales Manager and industry specialist within our Scotland team. Here he tells us about the favourite part of his role and discusses his predictions for the industry in 2024.

Briefly tell us about your role and what you do…

I started with Close Brothers Asset Finance as an Area Sales Manager in 2018, and since early 2023 I have been a Regional Sales Manager. My role involves maintaining good relationships with our existing customer base and more importantly helping their businesses grow. I also spend a lot of time out on the road building new relationships with prospective customers. One of the most useful things is being able to sit down in front of our customers, gaining a real in-depth understanding of how their business works, which enables us to tailor the best finance solutions for them. As part of my role, I also manage a small team of Area Sales Managers providing support, mentoring and an understanding of how we work at Close Brothers Asset Finance.

What was your journey to Close Brothers Asset Finance?

After gaining a Higher National Diploma in accounts I worked in a variety of financial services roles. Looking for a new challenge I joined Bell Equipment, a South African based company that manufacture articulated dump trucks, in

this role I was responsible for the Scottish parts department. I then moved to Finlay Scotland, suppliers of tracked mobile crushers and screeners and following this I joined Close Brothers Asset Finance. The experience gained in working for two equipment suppliers has given me a better understanding of the assets we can fund and an introduction to several of my current customers.

What’s the favourite part of your role?

I’ve found that the best part of my role is being able to get out and meet people face to face. Whether it be an existing or a new client their business journey is often very fascinating. At Close Brothers Asset Finance most of our business is completed face to face which is ideal for me though being in Scotland it is important to keep boots and waterproofs in the car!

Can you give us an example of a time where asset finance has helped one of your customers?

I had a customer who had ordered two new tractor units which he would be using to fulfil a new contract that he had just undertaken. We were able to come up

with a finance solution that worked for him and suited his cashflow, offering a deposit spread over six months and deferring the VAT allowing him to get his trucks on the road. Through the use of asset finance this customer was able to invest in and ultimately grow their business.

What assets have you found are the most ‘in demand’ at the moment?

I’ve found that executive chauffeur vehicles are in high demand at the moment. I suspect the likely reason for this is that people are more willing to travel and spend money on holidays with the effects of both the pandemic and Brexit reducing.

What do you think 2024 holds for your industry?

I hope that in 2024 we will see some stabilisation in the market and hopefully there will be a slight reduction in interest rates. This would in turn act as a catalyst for investment and ideally bring the more wary borrowers back to the market.

Our team are specialists in their fields and experts in asset finance. Contact Cameron and the team today by calling 01355 888 314.

Very simply, it allows businesses of all sizes to get the equipment, vehicles and machinery they need. All without having to pay the full price upfront.

We understand the industries we work with and we offer a choice of finance options that best suit your needs. Products