FINANCE and car leasing brokers will play a pivotal role in helping small companies emerge from the recession. Brian Rogerson reports.
EXPERIAN has given small businesses an excellent shot in the arm.
Research conducted during November 2009 showed that the financial strength of small UK businesses was improving and insolvencies were falling as the recession turned the corner. With this news comes the likelihood that small business investment in company cars, and other business assets, will begin to pick up during 2010.
The use of a finance broker to secure the best deal will, once again, become a pertinent question for directors of small companies.
During the recession independent finance brokers have experienced difficult trading conditions as their traditional funding sources – the banks – have become illiquid and effectively “dried up”. Some have gone to the wall and closed down – but the majority have survived and are stronger.
The finance broker, moreover, has an important position in the supply chain. As an intermediary, the broker acts as a conduit to match customers’ finance needs with appropriate funding sources and appropriate products.
During periods when credit is readily available to most businesses this service is usually quite simple and these hard-working individuals can maximise their incomes. They do this by being available to do much of the leg work and to ease the process for clients, the vendors and the funders.
During times of change, uncertainty and transition, the successful broker is required to enhance the process by analysing the needs of clients, suggesting in detail meaningful solutions and by assisting funders through the credit process with a more in-depth understanding of the complete transaction.
The changing role of the car leasing broker
The leasing broker must morph from a sales person and a processor to an advisor and a consultative intermediary who offers powerful, value-added substance to all of the parties involved in the transaction.
The broker who deals in small to lower-ticket transactions must move beyond any application-only mentality and embrace a complete financial understanding of the transaction. Recommendations for approval must include rational, supported data which emphasise the strengths and full explanations to mitigate any weaknesses in the transaction.
As the UK economy moves from the recession the demand for capital equipment returns – and funding sources emerge to fund stronger transactions – then the finance broker who is well informed, well positioned and capable of acting in an advisory capacity will be in great demand. Much of the competition will be rightfully omitted from the market, old relationships will be disrupted, new products and criteria will need to be fully explained and clients will require knowledgeable individuals to assist in navigating a new financial landscape.
The broker as your business partner
The savvy broker will have become a business partner whose expertise adds essential value to every transaction. One size will not fit most transactions, but rather the broker will match finance structures to individual cash flow requirements. The smart broker will, therefore, attract stronger credits and facilitate more complex transactions, which will assist in higher approval ratios, stronger funder relationships, more repetitive business and increased profitability.
The re-birth of finance broking in the UK has been bolstered by its trade associations. In October the National Association of Commercial Finance Brokers (NACFB) stressed: “The absence of easy credit means that struggling small businesses need expert advice – now more than ever. And whilst these are still desperate times for the small businessman, we must not lose sight of treating the customer fairly.”
In December, the British Vehicle Rental and Leasing Association (BVRLA) strengthened its Code of Conduct for car leasing brokers as part of ongoing moves to improve standards of professionalism and customer service in the sector. The new code took effect from the beginning of January 2010 (see news story Leasing brokers serve a better deal to businesses).
With every new challenge comes new opportunity. UK finance brokers are improving their personal skills and optimistically engaging themselves with new clients and new vendors. As a new decade dawns for small businesses they can be sure that they have never been so well served by their broker colleagues.
Fleet Alliance comment on the new small business/broker relationship
Martin Brown, managing director of business car solutions provider, Fleet Alliance, has the following comment on small businesses and finance brokers.
“Now the responsibility of the broker is not only to provide sound and professional funding advice, products and services but to ensure the right funding lines are available to meet their clients’ requirements. This alone has proved to be a challenge as funders’ business appetites have diminished, changes to underwriting policies and indeed the reduction of available funders makes a broker with a “multi funder” model an even more essential proposition when considering a suitable funding partner.
“Fleet brokers with a solid fleet customer base also offer the funders the quality of business they now demand as well as continue to offer their clients a professional and independent source of funding advice.
“As business car customers prepare to face the challenges of 2010 I’m sure the ever increasing reliance on the experienced car leasing brokers will continue to add value to anyone running company vehicles.”
Further information on leasing brokers
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