Schools are becoming victims to Rogue Equipment Leasing Companies

A recent report has been under taken and it has shown that schools are an easy target in being badly charged for their office equipment such as computers and photocopiers through the mis-selling of both their new and old equipment leasing agreements.

Schools have been known to pay up to 10 times more than they really should be for their leasing agreements on their photocopiers.

The chief executive of the National Association of Schools Business Management William Simmonds said that he knows of one school whereby the leasing agreement is showing the school as owing £80,000 on a photocopier which should have been £14,000.

Primary Schools throughout the United Kingdom are being targeted by commission hungry sales equipment companies whose sales representatives convince them into signing equipment agreements, which at times are often confusing and miss leading – the end result ending up with them paying an unreasonably high rate of interest on computers and other school equipment.

In some cases School Head Teachers are being chased by finance companies for payment when they thought that the items that they were purchasing were free.

A school in Suffolk received a call saying that a company has sourced “FREE” laptops of which they took advantage and had 100, they then signed a disclaimer but did not realise that they were not free at all but ended up with a bill into the hundreds of thousands of pounds.

The total monetary value of badly or misinformed leasing agreements being sold to local authorities and schools is believed to run into millions of pounds.  Unfortunately there are those less unscrupulous equipment leasing companies shall we say who will look to be quite aggressive and take advantage if they get the chance and charge extortionate fees and costs for leasing equipment.

A new service industry will grow in helping those businesses and organisations who think they may have been mis-sold an equipment lease agreement. The service  offering a chance to evaluate FREE of charge via a Forensic Lease Check to see if any overcharges within equipment lease agreements has taken place also looking at assessing who’s at fault either the supplier and the finance company or even both.

With schools the problem maybe that Head Teachers although having great experience in the running of a school as well teaching, the maybe be leaving too much to the equipment supply companies and therefore in some instances not receiving the right advice in relation to their Equipment Leasing Agreements.

The Industry body aptly named ‘The Finance and Leasing Association’ said that they have a conciliation procedure for customer complaints and are encouraging companies to be proactive and get advice on whether their existing leasing agreements are lawful and integral.

Do you wish us to instigate a Forensic Lease Check on your equipment? If so let us know by filling out this form.

Project Merlin blames small businesses for not asking for finance.

News today that Project Merlin has failed to hit the £76 billion lending targets to small businesses.

The actual lending fell short by some £1.1bn and the failure has been strenuously defended by the banks including the likes of Barclays, HSBC, Lloyds Banking Group, Santander UK and RBS. The five banks who had promised to lend £76 billion as part of the £179 billion target set by the bank of England to smaller firms during 2011 have laid the blame on the smaller businesses in the United Kingdom for not coming forward and asking for more access to finance.

A bank representative said “that demand for credit had fallen in 2011 compared to previous years”.

One reason that many businesses in the United Kingdom may not have applied for small business funding is that they may have a lack of confidence in approaching the banks. As we all know that banks in the past have not been able to help companies with their requirements for funding with access to Commercial Mortgages and Business Investment being two of the predominate areas of finance being highlighted by small businesses where more help could be needed?

The banks involved in project Merlin who were being monitored by the Bank of England argue that they have in fact lent £211 billion in 2011 which was more than the expected £179 billion. The more cynical of us may thing that such an increase was as a direct result of the rewriting of loans whereby extra amounts are added to loans already within the system.

Although some business organisations have argued that the original target of £76 billion within the overall £179 billion target specifically set to be allocated to smaller businesses was too low a target in the first place.

Historically small businesses have often used their own savings or money which has been begged, borrowed and steeled from family and friends to help them with financing to survive and move forward. The problem is that although with the financial situation not likely to improve significantly enough in the next 6 to 12 months – now even the relatively small amounts of borrowing from friends and family is becoming more difficult.

Overall more help is needed to lend and even make the finance application process more straight forward, being less time consuming and not solely reliant on trading performance – instead looking at factors such as markets, trends, knowledge and experience as well as individual capabilities as we need small businesses to help boost the economy.

What would a bank look at when assessing a business borrowing request?

Despite what you may think a bank is always keen to provide finance to businesses in order to support their growth.

When a bank assesses any borrowing request they will look at a range of factors to help them with their decision – with this in mind and in order to help with preparation for any borrowing request we have detailed below some pointers for consideration.

It is important to note that consideration by a bank on access to finance requests by a business will involve credit scoring which could take into consideration 3 broad areas.

• The information that a business provides as part of its application.
• Any information which the bank may already hold about the business.
• Information which they obtain from external credit reference agencies.

Information which a finance application will require is:-

You and your business – as they will wish to gain a full understanding of the business and the skills and experience of the owner / management.

Personal / Business Investment – as they will need to established what the applicants investment is in the business compared to what a bank’s investment might be.

Purpose – why is the funding required can be explained by advising how and where it would fits within the business and its plans.

Amount – this will allow a bank to determine if the amount being requested is appropriate as well as allowing the structuring of the funding in the most suitable way.

Term – Discussing the time period over which the funding is required helps a bank in assessing the businesses finance options in the most suitable way.

Repayment – a bank as a lender of finance will need to understand how a business intends to repay the funding as well as be confident in the businesses ability to do so.

Other information and supporting documents may also be required such as:-

Security / assets – relates to the provision by the business and / or owner of some form of appropriate security such as guarantees, property or other assets that are straightforward to value and if necessary to realise.

Other business interests – informing of other commitments which the owner and / or the management may have as this will allow a bank to assess how much attention and focus the business would have.

Cash flow forecast and business plans – regardless of the type of business or how profitable it may be, it will struggle if it runs out of cash. Therefore by writing a business plan will help a business to think logically about its operation, its strategy as well as its business model.

Management accounts and historic accounts – evidence of past financial performance will contribute towards an existing business funding application.

Invoice finance could be a simply smart way to improve your cash flow

A vast majority of Businesses in the UK with the exception of a limited few are experiencing hard times especially those in the SMEs market, as always cash flow problems and balancing the books are the main elements which cause concern. For SMEs it exacerbates into a bigger problem if when they approach their bank and the application for an overdraft or funding is turned down. Constant decline is something which is very probable at the moment so businesses may need to look at an alternative route to finance their business such as invoice factoring.

Invoice factoring is a process where a business effectively transfers their invoices to a finance provider who in turn advances them a percentage of the invoice value which is normally between 85% to 90%. An example being if the invoice outstanding is £1000 the invoice factoring company will advance immediately would be £850 to £900, thus eliminating the need to wait for the customer / creditor to pay.

The types of companies who will be considered for Invoice factoring are companies who will normally have a turnover of more than £50,000, some start up companies and companies with a smaller turnover may be considered by some factoring companies if they have a decent range of customers spread over different sectors and they need to have a manageable amount of money outstanding which is more than 90 days overdue.

Remember that if you do decide to have an invoice factoring facility, you as a business lose control of how the invoice is collected, so take time in making sure that you trust the invoice factoring company not to be too heavy handed in their collection processes as you may have direct contact with that creditor in the future.

Also two other points to remember with invoice factoring is that you do not receive the full value as payment as a small percentage is kept by the factoring companies by way of a payment per invoice for providing the factoring service. As well in some cases the outstanding debt on the invoice on which money has been advanced will be transferred back to you after a certain period of time.

The good thing about Invoice factoring is that you are not being stifled by the non payment of invoices and will be able to operate your business and move forward. The bad thing is self control in that some businesses become too reliant on immediate money being available and as such always think that their flush with money, and therefore over spends or do not spend wisely.

There are certain companies who will struggle to get a factoring finance agreement they are companies who sell to the public and if they have a large amount of invoices with lots of complicated terms involved in the payment these scenarios are considered not suitable by mainstream invoice finance companies.

With the range of different types of business finance it can be difficult to make the correct decision without the help of a business finance specialist as they can look at which option will suit your company and put together a financial package which could help you ease some of your current cash flow problems.

Can going at 80mph help you be simply smart with your business expenses

As the cost of living continues to rise, it is hardly surprising to hear that there has been a suggestion to increase the speed limits on motorways to 80 mph which is another way to look at stimulating growth for the economy.

Transport secretary Phillip Hammond said that the increase “would generate economic benefits of hundreds of millions of pounds through shorter journey times.

Ministers also said that it would “unclog the arteries of a healthy economy”.

The increase in speed was welcomed by motoring groups but it was not getting any approval from the environmentalists.

Again it looks like it’s a little bit of desperation creeping in as altering the speed limits is not the answer to a problem which seems to be broadly getting more serious by the day.

We have all heard of the plans that have been put in place by the government to ease the pressure that is being felt by businesses in the UK at the moment. The 75 billion cash injection made this week into the economy through quantitative easing which not too long ago was criticised by Mervin King.

Mervyn King made comments this week that the financial crisis could be the worst ever. He said that “this is the most serious financial crisis we’ve seen at least since the 1930’s, if not ever”

The times now are historic and many businesses will continue to unfortunately close.

The companies/organisations who will survive are going to be the ones who face up to the challenges and try and be simply smart with their money and put actions in place to squash costs and try and be positive.

All we can say at the moment is that however bad/diverse the news is there are things which a business can do to reduce their costs. In the not too distant past businesses would make a comment such as “I am ok where I am” or “not bothered”!

Insurance is not the most exciting thing to talk about and the same can be said of utility bills but today as Mervyn King commented, is the most serious money crisis ever, he said to “act calmly and do the right thing”.

So really it is down to businesses to take action and be simply smart with their money and look at things which are in their control such as business insurance, fuel costs and business utility bills.

Now Banks are going to be offering mentor support to businesses

The five biggest banks in the United Kingdom have launched a business mentor support service for small to medium sized businesses.

The idea behind the mentoring scheme is to offer businesses support in finance, marketing and human resources.

Barclays, Lloyds, HSBC, The Royal Bank of Scotland and Santander are part of www.mentorsme.co.uk which is being operated by the British Bankers Taskforce which has been set by the British Bankers Association to help businesses find mentors who can help them gain knowledge of operating a business. 

We wonder if mentorsme.co.uk is going to help businesses find out how to take advantage of the amount of money promised through Project Merlin, an agreement formulated by the Banks to pledge to lend more money to small businesses in 2011 and pay out less in bonuses to their staff than they did in 2010.

Banks have in the past been criticised for not lending enough money to small to medium sized businesses – and in accordance with the Project Merlin agreement have promised to lend a total of £76 billion during 2011, which is planned to be paid out over 4 quarters.

In line with the Merlin deal the amount which has been lent by them in the first three months of 2011 totals £16.8 billion which was slightly down on the promised quarterly amount (£19 billion) from the Banks.

The mentor support scheme is meant to forge a better relationship between the Banks and businesses, as many businesses are still not getting the financial support in order to assist them be able to grow or even survive in these cash squashed times.

Responding to criticism from businesses throughout the United Kingdom Stephen Pegg of the Lloyds banking group said “there is finance available and the scheme would help businesses gain more access to finance”.

Let’s hope this helps it make the process easier and prevents businesses from wasting time on preparing business plans that come to nothing and get unbiased advice from these mentors who will help companies gain vital support to help them move forward over the next 12 months and beyond.

Business Loan Applications

One in three businesses are currently being rejected by their bank when they approach and ask for a loan or an overdraft, research reveals today.

The report, from the Institute of Directors (IOD), highlights the nightmare facing cash-strapped businesses struggling to survive Britain’s economic crisis.

In a further blow, the lucky few who get the go-ahead complain of having to go to extreme lengths to get the money.

Nearly 40 per cent said they had noticed – ‘an increase in the amount of security’ being requested by the bank. In many instances, this means that the boss is forced to put up his home as security.

It comes as figures from the British Bankers’ Association yesterday showed net business lending by banks has plunged to an all-time low.

In May, net lending plunged into negative territory of -£458million, the worst score recorded by the BBA since the monthly series began in October 2008.

Gross lending is the total amount of money handed out by the banks, while the net figure excludes the money paid back by businesses.

Miles Templeman, director general of the IOD, said he is concerned that firms’ ability to raise money ‘remains difficult’ and said bosses are being asked for ‘ excessive’ demands.

Between January and June 2010, the respected business lobby group asked nearly 900 bosses whether or not they had asked their bank for a loan or an overdraft. Of those who had applied for money, 33 per cent were turned down. The majority of the bosses run small and medium-sized businesses.

Although an eye opener, this is still much better than the previous survey which the Institute of Directors (IOD) carried out last year, which then found that 57 per cent had been rejected, but it proves the situation for businesses remains extremely difficult.

Many firms say they want to borrow, but were being offered deals on terrible terms which they could not accept.

Many have had to borrow from friends and family, use their credit cards or raid their savings because they could not borrow from the banks.

Businesses Still Loosing Out as Bank Loans Fall

During June banks lending to business fell by £1 billion this has been the third consecutive monthly decline the Bank of England showed yesterday.

For the UK’s banks the data has come at an embarrassing time as they were hauled in front of the chancellor this week to explain why they have not been lending to businesses. The pressure is also likely to increase on the Bank’s Monetary Policy Committee (MPC) – which meets next week to discuss interest rates and argue the money that is being pumped into the economy.

Currently the MPC has £125 billion limit on its scheme of quantitative easing this was launched in an attempt to unclog lending and some economists are now calling for this to be raised to £150 billion.

Chief UK and European economist at IHS Global Insight, Howard Archer commented “The Bank of England has repeatedly stressed that it will take time for QE and other measures undertaken by the Bank and the Government to fully feed through to support bank lending.”
He added: “There continues to be little hard evidence of this so far, which is potentially worrying for recovery prospects if the situation persists.”

Mortgage approvals for those buying homes rose to their highest level in more than a year in June. Some 47,584 deals were approved by lenders, up from 44,169 in May and nearly a third higher than in June last year. Meanwhile it has emerged that estate agents are rehiring staff and opening offices in response to renewed signs of life in the market.

Skeptical about this the economists said that the current rate of approvals, at well below the long-term monthly average of around 93,000 a month, indicated that property prices are set to fall further.

Mr Archer said: “Mortgage approvals above 70,000 a month are generally consistent with rising prices.”

The rise in approvals has eclipsed by figures showing that overall lending to households rose at the slowest pace since records began 15 years ago. Consumer lending and net mortgage amounts from banks and building societies increased by £414 million in June, compared with a rise of £3.5 billion in the same month last year.

The interest of bargain hunters in the property market has spurred a recruitment drive in estate agencies. Advertising at Foxtons has begun for new sales and lettings agents, who can look forward to a basic salary of £22,000, commission and one of the famous Foxtons Minis.

Chesterton Humberts has signed up a number of senior staff “in order to cope with the workload”. Robert Bartlett, chief executive, said: “Business has been considerably more buoyant in the last four months. We are hiring but in a sustainable way. I don’t want to have to go through making people redundant again.”

Over the past two years Thousands of estate agents have lost their jobs with an estimated 7,000 out of work by the end of 2008.