Inside Newsletters - Transport - September 2023

TRANSPORT

Business Sentiment Index Diving into the surveyed statistics of the Transport industry

Meet the Expert Meet our industry specialist, Harry Sewell, Regional Sales Manager

2023 Issue 2

I’m delighted to bring you the latest business news from the Transport division.

As always, it focuses on the current issues affecting Transport SMEs, whilst also showcasing how Close Brothers Asset Finance has supported businesses within the industry and will continue to do so.

We start this issue, on page 3 with a piece looking at Transport SMEs attitudes to funding. A key finding from this survey is that nearly half of Transport firms 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 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 Transport and Haulage SMEs following the challenges of rising inflation, increasing energy costs and higher interest rates.

Brothers Asset Finance were able to assist this customer in expanding their fleet through several Hire Purchase agreements.

Finally, on page 7 we have our ‘Meet the Expert’ feature. Harry Sewell is a Regional Sales Manager and industry expert within our Transport 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.

John Fawcett CEO, Transport division

On page 6 we feature a case study looking at Adept Vehicle Management. Close

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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Energy, Engineering, Print and Transport.

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, including Transport.

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 Transport firms 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

Cost of borrowing

Nearly a quarter of Transport 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 Transport.

51% 20% 62% 26%

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 Transport 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 finance.

Interestingly, 43% of Transport SMEs are confident the economy will grow in the coming 12 months, against 38% who expect a further slowdown of economic activity. The rest anticipate no change.

54%

have seen an increase in their cost of borrowing.

25%

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

44%

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

29%

of those surveyed think interest rates have peaked.

Unfortunately, 58% of Transport 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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confidence continues to fall across all sectors, including Transport & Haulage 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 Transport and Haulage businesses’ priorities, which are achieving growth (31%; UK: 28%) and managing costs (25%; UK: 26%), well ahead of paying down debts (12%; UK: 9%) and investing in staff (10%; UK: 14%).

BSI scores – June 2020 to May 2023 Research date

BSI score UK

BSI score Transport and Haulage

May-23

20

27

Dec-22

11.5

14.25

Jul-22

14.25

18

Feb-22

27.9

27.1

Sep-21

31.75

33.86

Apr-21

28.63

28.95

Nov-20

14.5

17.5

Jun-20

12.25

13.25

Appetite for investment Overall, the appetite to invest remains strong, as it was at the end of 2022, with 81% (UK: 75%) of Transport and Haulage firms looking to seek funding for investment in the next 12 months. your business plan to seek funding Q Does for business investment in the next 12 months?

UK Transport & Haulage

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Yes

No

May-23

75%

25%

Dec-22

76%

24%

May-23

81%

19%

Dec-22

72%

28%

Missed opportunities The number of Transport and Haulage companies that have missed business opportunities because of a lack of available funding stands at 43% (UK: 45%) in May 2023.

While this is an improvement, these are historically ‘high’ figures – for example, in May 2022, 37% of UK 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.

Q

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

Yes

No

UK

45%

55%

Transport & Haulage

43%

47%

Economic outlook Transport and Haulage businesses are very slightly more positive than negative about the macro-economic outlook, which marks a significant change from the end of 2022.

This indicator 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%.

Confident economy will grow

Concerned There won't be a economy will slow significant change

May-23

43%

46%

11%

Dec-22

36%

55%

9%

Transport & Haulage May-23

47%

46%

7%

Dec-22

35%

51%

14%

UK

Score calculation 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

closeassetfinance.co.uk

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Case Study:

Hire purchase agreements help fleet provider grow business – Adept Vehicle Management

Adept Vehicle Management (AVM) was established in 2002 as an independent fleet provider serving corporate and public sector organisations across the UK. Their services include Accident and Fleet Management, Personal and Business Contract Hire Brokering and Vehicle Hire.

In response to the growing demand for their services, AVM have this year introduced the new Prohire Vehicle management software. This aims to enhance their existing service standards throughout the life of the contract they provide.

A growing client base With their business growing, AVM have found it necessary to acquire additional vehicles to meet the demands of their new clients. The new vehicles required included a number of cars and commercial vehicles. The team approached Wayne Wilson, Area Sales Manager, Close Brothers Asset Finance, for assistance with a funding solution.

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Solution Wayne worked with the team at AVM to understand their business, putting together a finance agreement which utilises a Hire Purchase product.

By using Hire Purchase, AVM could spread the cost of the new vehicles into manageable instalments to suit their cash flow.

Result As a result of the new finance agreement, Adept Vehicle Management has been able to acquire the new vehicles. This has expanded their existing fleet, helping with the influx of new customers.

Wayne commented: “It’s always a pleasure to help SMEs grow their

business and achieve their expansion goals. I look forward to working with the team at Adept Vehicle Management on more agreements in the future.”

“Wayne and the team at Close Brothers Asset Finance have been exceptional throughout the entire process. We’re very happy with outcome of our current agreement as they have enabled us to expand our fleet for our new customers. I look forward to working with Wayne and Close Brothers again in the future.” Carl Cumbo, Adept Vehicle Management

Contact the team today, by visiting closeassetfinance.co.uk/transport

Meet the Expert:

Harry Sewell Regional Sales Manager

Harry is a Regional Sales Manager and industry specialist within our Transport 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’m currently a Regional Sales Manager within our Transport Division based in Wimbledon and look after the Hertfordshire area. I also support a team of Area Sales Managers, helping them to overcome challenges and more complex deal scenarios. The role also includes involvement with all departments of the business, supporting our customer services, credit and operations.

What was your journey to Close Brothers Asset Finance?

I previously worked in commercial vehicle repairs, sales and hire. Initially I was working within a family business as an apprentice but then progressed into management. Following this I decided to start up on my own, continuing in truck sales and repairs.

Doing this allowed me to gain valuable experience in many sectors and meet

customers that I still work with today.

I have been with Close Brothers for 8 years, I initially joined the company as an Area Sales Manager. I was then promoted to my current role of Regional Sales Manager.

example of this is our VAT deferral offering which gives the customer time to reclaim the VAT on their purchases before it needs paying. This is able to assist the customer by keeping their initial cash outlay low.

What’s the favourite part of your role?

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

The best part of my role is helping and watching customers grow their business from small starts to bigger ventures. This in turn allows me to offer a more dynamic and tailored service, something that always keeps the job interesting and diverse.

Give us an example of a deal structure that demonstrates how you can you help a customer We offer a range of tailor-made support for customers, from simple single asset deals to more complex deal structures.

Each agreement we put together is specific to suit different businesses and their asset life expectations. A good

I suspect our varied customers will find the wider economy challenging over the coming 12 months. The effect of inflation and subsequent interest rate rises will no doubt be a primary factor.

Regardless, Close Brothers Asset Finance will be here to support them through.

Our teams are specialists in their fields and experts in asset finance. Contact Harry and the team today: North – 01283 808 731 South – 020 3393 9963

closeassetfinance.co.uk

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SUPPORTING THE UK TRANSPORT INDUSTRY 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 equipment • Create positive cash flow for your business

Contact us today, we’re here to help closeassetfinance.co.uk/transport

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.