Moving the Goal Posts !

In this present financial situation that we find ourselves locked into, we are all fully aware that change has hit the leasing industry.

 

The change is not for the better as all of the main leasing companies have simply picked up the pitch as well as the goal posts, and have moved them twenty five miles down the road.

 

Large sectors of the market are now almost “no go ” areas for the underwriters. Just think that building, construction, motor, retail etc, huge swathes of the economic base of the UK are almost excluded from leasing.

 

The effect on suppliers of equipment who use leasing as a sales tool is they have been left high & dry. One funder quoted a very large manufacturer last week that unless the customer was either a local authourity or part of the government, they could not accept the risk. Whilst I understand that underwriters have to change their terms, and become more risk adverse, unless they are very carefull they will descend into oblivion.

 

Let me explain, if you reduce the amount of new business you are writing, the percentage of bad debt on the leasing book has to rise. If you start to put into the equation that deliquency is rising, the percentage of bad debt will rise faster and faster, until someones says enough is enough, and another funder closes its doors.

 

This coupled with the fact that underwriters are now looking very closely at ratios and net worth of companies, which companies will show growth in their net worth in the next accounting period 08/09? I would expect very few. This will purely exacerbate the problem.

 

So what is the road ahead? I think as the Beatles put it very succinctly, it will be a long and winding one ! The key is to think outside the box, and seize opportunities that will arise. That is what Oak Leasing has done ( see Leasing Life article)

 

To see how we can help, just send us an e-mail sales@oaklease.co.uk. We will help you seize the opportunity.

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