Inside Newsletters - Scotland - September 2023

SCOTLAND

Business Sentiment Index Diving into the surveyed statistics of UK SMEs

Meet the Expert

Meet our industry specialist, Kevin Byrne, Regional Sales Manager

2023 Issue 2

Welcome to Inside Scotland I'm delighted to bring you the latest business news from the Scotland division.

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 piece looking at Scottish SMEs attitudes to funding. A key finding from this survey is that nearly half of SMEs surveyed are not aware of asset finance, meaning many haven’t unlocked the benefits this can bring.

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.

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.

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 the cautious return of confidence for SMEs following the challenges of rising

inflation, increasing energy costs and higher interest rates.

On page 6 we feature a case study looking at Fresh Car Valeting. Close Brothers Asset Finance were able to assist this valeting business in expanding their franchise through several Hire Purchase agreements.

Finally, on page 7 we have our ‘Meet the Expert’ feature. Kevin Byrne 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

Close Brothers Asset Finance launches 4th Sales Academy Close Brothers Asset Finance is delighted to announce the return of its highly successful and industry-leading Sales Academy, which is designed to attract new and diverse talent into the sector from across the UK. There are six positions available in this year’s Sales Academy, and in keeping with previous criteria, experience in finance or sales is not a prerequisite. Close Brothers Asset Finance is looking to attract enthusiastic candidates from a range of backgrounds who want to build a successful career in sales and become specialists in one the many sectors the funder supports, including Renewable

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Inside Scotland

Energy, Engineering, Print, and Agriculture.

John Fawcett, CEO of Close Brothers Asset Finance’s Transport division: “We are very proud of our specialist business model and want to build on the outstanding success of the first three Sales Academies, which has seen many of the previous ‘graduates’ fully integrated into the Asset Finance and Leasing sales teams and leading very successful careers in their chosen sectors.”

“This is an incredible opportunity to be trained by an industry leader and mentored by an experienced Sales Manager for 'on the road' training. Following their training

period, successful applicants will concentrate on building a customer base, territory and business plan, with full assistance from a mentor.”

Attitudes to funding At Close Brothers Asset Finance we regularly survey business owners in the sectors we fund. Taken from our latest survey, in this piece we focus on attitudes to ‘funding’, finding out, for example, if firms are planning on seeking funding, and if they’re confident about getting access to the loans they need to grow their business.

A key finding is that nearly half of Scottish SMEs are not aware of Asset Finance, meaning a large number still haven’t taken advantage of the many benefits to be gained from leveraging value from their existing assets.

Access to funding

Impact of energy price rises

Over a quarter of Scottish business owners say getting access to funding is a ‘major challenge’ and more difficult now than it was a year ago.

The increases in the cost of doing business has had a major impact on businesses in all sectors, including Scotland.

52% 25% 77% 31%

tell us it’s a ‘moderate challenge’ and as difficult now to access finance as it was a year ago.

admit to having been declined access to finance by a bank in the last six months.

of Scottish firms, despite the challenges are planning on seeking funding for investment in 2023.

have missed a business opportunity in the last 12 months because of a lack of available

Interestingly, 38% of Scottish SMEs are confident the economy will grow in the coming 12 months, against 46% who expect a further slowdown of economic activity. The rest anticipate no change.

63%

have seen an increase in their cost of borrowing.

21%

of Scottish SMEs have switched funders because of increased interest rates.

56%

have considered alternative forms of finance because of increased interest rates.

35%

of those surveyed think interest rates have peaked.

Unfortunately, 58% of Scotland respondents to our survey have had to increase their prices to cover the increased cost of borrowing.

For more industry insights, please visit closeassetfinance.co.uk

closeassetfinance.co.uk

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Cautious return to confidence for SMEs

Close Brothers Asset Finance’s Business Sentiment Index (BSI), which measures SME business confidence, has risen for the first time since September 2021 following three consecutive falls, and a low at the end of 2022. These were caused, in the main, by rising inflation, energy cost increases and higher interest rates.

Despite the headwinds still being faced by small and medium-sized firms and inflation stubbornly remaining in double digits, wholesale energy prices have fallen from their summer 2022 peaks, and there appears to be more certainty about where interest rates rises are headed, all of which is helping firms plan with more assurance.

This change in confidence is better understood when looking more closely at businesses’ priorities, which are achieving growth (28%) and managing costs (26%), well ahead of issues like paying down debts (9%) and business consolidation (9%).

BSI scores - June 2020 to May 2023 Research Date

BSI Score UK

% change

May-23

20

+74%

Dec-22

11.5

-24%

Jul-22

14.25

-96%

Feb-22

27.9

-12%

Sep-21

31.75

+11%

April-21

28.63

+97%

Nov-20

14.5

+18%

Jun-20

12.25

Appetite for investment Overall, the appetite to invest remains strong, as it was at the end of 2022, with three quarters of UK firms looking to seek funding for investment in the next 12 months, up from 67% in July 2022. your business plan to seek funding Q Does for business investment in the next 12 months?

UK

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Inside Scotland

Yes

No

May-23

75%

25%

Dec-22

76% 24%

Missed opportunities The number of companies that have missed business opportunities because of a lack of available funding fell from 51% at the end of 2022 to 45% in May 2023.

While this is an improvement, these are historically ‘high’ figures – for example, in May 2022, 37% of respondents answered ‘yes’ to the question ‘have you missed a business opportunity in the last 12 months, due to lack of available finance?’.

It would appear businesses are concerned about impacting their cashflow by dipping into their reserves or taking out a standard loan and adding to their debt burden. you missed a business opportunity in the last Q Have 12 months, due to lack of available finance?

UK

Yes

No

45%

55%

Economic outlook Businesses continue to be more negative than positive about the macro-economic outlook but the gap between positive and negative sentiment narrowed significantly since the start of 2023.

That being said, this indicator that has contributed most to the decline in the overall BSI; for example, in November 2021 75% of respondents were positive about the economy – by December 2022 this had fallen to just 36%.

UK

Confident economy will grow

Concerned economy will slow

There won't be a significant change

May-23

43%

46%

11%

Dec-22

36%

55%

9%

Score calculation The BSI is based on the views of 911 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

closeassetfinance.co.uk

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Case Study:

Helping to fuel the growth of a valeting business – Fresh Car Valeting

Who? Fresh Car Valeting is the brainchild of owner Sam and his friend Thomas, who started the firm in 2016 as a project at Heriot Watt University, using their shared passion for cars to fuel the project. It was so successful they continued with it after they finished their course and have been valeting cars ever since!

Today, they operate across the UK through a team of trusted franchisees.

What? Fresh Car Valeting offers two franchise options: • Car valeting, which includes the option to rent a van • Repair service that offers mobile car body repair, including minor scratches, scuffs, dings, and dents to vehicles using their Small to Medium Area Repair Technology (SMART)

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Inside Scotland

Where? The Fresh Car Valeting team is based in Edinburgh, but through their franchise model provides services to their customers across the UK. Why? There has been an agreed credit line in place since 2020 – in that time Close Brothers Asset Finance financed numerous vans as well as the SMART scratch and scrape repair kit.

How do you typically work with customers?

Fresh Car Valeting has grown quickly with plans to expand to even more locations across the UK by staying true to their ethos of: • Reliability • Quality • Fun Scott Grant, Area Sales Manager for our Scotland Transport team: "We’ve thoroughly enjoyed

working with Sam, Thomas and the rest of the Fresh Car Valeting team. They’re a great example of how having an entrepreneurial spirit can be successful, providing skilled employment opportunities to people who want to be self-employed. We’re looking forward to partnering with them in the coming months and years as they continue to expand and grow.”

“Close Brothers Asset Finance have been a great help in the expansion of our business. With their support we have grown our number of franchisees and expanded the number of happy customers able to experience the Fresh Car Valeting experience.” Sam Brennan, Fresh Car Valeting

Contact the team today by visiting closeassetfinance.co.uk

Meet our industry specialist

Kevin Byrne Regional Sales Manager Kevin is a Regional Sales Manager and industry specialist within our Scotland team. Here he discusses the favourite part of his role and his predictions for the sector over the coming 12 months.

Briefly tell us about your role and what you do…

I joined Close Brothers Asset Finance in September 2013 meaning that I am celebrating 10 years with the business which fills me with great pride and achievement.

I am currently a Regional Sales Manager within the Scotland team; my day-to-day responsibilities consist of managing a large portfolio of existing customers in the West Coast of Scotland. Whilst managing existing customers, I am also always out and about visiting new customers, learning their challenges, and working with them to help grow their businesses. This requires a deep knowledge of both the industries we work across and the assets that we fund, this knowledge allows us to provide firmer lending decisions and faster access to funds when clients need them the most. Helping businesses with bespoke packages to achieve their business goals is essential to our success. In addition to looking after my own customers, I manage a team of sales managers, offering support to their growth and development.

What was your journey to Close Brothers Asset Finance?

I have worked in the Banking and Finance industry for 22 years in a variety of roles. I initially joined Close Brothers as a Telesales co-ordinator in 2013. This involved mainly calling prospects and existing customers daily to build relationships and seek out opportunities for our sales team in Scotland.

In 2015 an opportunity arose to apply for the

very first Close Brothers Sales Academy.

structure reflecting the high and low income

After a very thorough recruitment process

months the business experiences due

I was offered a position within the Glasgow

to demand for their vehicles. As well as

Transport team as an Area Sales Manager.

resulting in a delighted customer this allowed

In 2022 I was promoted to Regional Sales

the business to maintain their payments

Manager in Scotland. In my long career,

comfortably.

Close Brothers as an employer and business

What are your top 2 predictions for your sector in the coming 12 months?

in my opinion are second to none. They look to hire, nurture, and promote at every opportunity with no ceiling for achievement & that makes them such a great place to work.

What’s the favourite part of your role?

From speaking to partners and customers in our sectors I think next year will see a reduced wait time for new assets to arrive on our customers premises. This has been an

The favourite part of my role is finding

issue in a variety of sectors since Covid and

customers who we can form a long-term

has affected businesses in delivering their

partnership with, this allows us to work

goals. By reducing this wait time, it will see a

with them over a number of years to grow

renewed confidence for customers in moving

their business from a small one with little

forward their business plans and achieving

infrastructure to a larger business. In a lot of

their targets.

cases the businesses we work with can go UK wide and sometimes worldwide, but we still work with them as a partnership, offering our expertise and funding. The sense of achievement I feel in assisting our customers to grow their business never ceases.

Give us an example of a deal structure that demonstrates how you can you help a customer

2023 has also seen a cycle of base rate rises which in turn affects the markets control over rates for our valued end user, our customers.

We should see in the second half of 2024 base rates decreasing which in turn provides a more favourable lending package outlook for our business and the industry moving forward.

Listening to our customers and providing individual tailored finance packages is vital to their business. Recently I put together an agreement to purchase an asset for a long-term customer who provides motorhomes. This involved a deferral of VAT

Our team are specialists in their fields and experts in asset finance.

Contact Kevin and the team today by calling 01355 888 314.

until the 3rd monthly payment to preserve their cash flow but also a seasonal payment

closeassetfinance.co.uk

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SUPPORTING SCOTTISH SMES WITH ASSET FINANCE With specialist industry knowledge and tailor-made support, we offer a range of finance options which can: • Unlock the value of your existing assets • Let you invest in new vehicles • Create positive cash flow for your business

Contact us today, we’re here to help closeassetfinance.co.uk/scotland 01355 888 314

Products and services are subject to eligibility, status, terms and conditions and availability. All lending is subject to status and our lending criteria. The right to decline any application is reserved.

Close Brothers Asset Finance is a trading style of Close Brothers Limited. Close Brothers Limited is registered in England and Wales (Company Number 00195626) and its registered office is 10 Crown Place, London, EC2A 4FT.