I’m Richard Tamlyn and this is Bluestone’s Q3 update for 2021.
Well, we’re out of lockdown – freedom day has arrived and whilst there’s an air of caution, the country is slowly emerging from one of the toughest 18 months in history.
We’ve helped hundreds of businesses remain liquid over lockdown but the last quarter has seen a definite shift in focus with more and more businesses now looking to the future, and activating projects that have been delayed or put on the back burner during lockdown.
April saw a massive backlog of applications for the CBILS loan scheme prior to the government deadline of 31st March. As funders dealt with that, there was a delay to the launch of the Recovery Loan Scheme scheduled by the chancellor to go live on 6th April. The RLS is a government backed loan scheme designed to help businesses bounce back, but in reality it’s been a bit of a damp squib. The Financial Times reported at the end of April that uptake had been 75% down compared to the Bounce Back Loan launched earlier in the pandemic.
Whilst there was a lot of concern and criticism of the government for the scheme’s complexity and higher interest rates, the reality is probably that businesses had borrowed heavily and adequately enough from the initial schemes, and the furlough scheme helped businesses manage their cost base effectively, so maybe the government don’t deserve quite as much criticism as thought?
Whilst many finance applications are complex, here at Bluestone we take all of that away and work with you to coach you through the process and ensure your application is positioned correctly and with as much chance of approval as possible, so if you do need assistance give us a call or follow the link below.
And the slow uptake of the RLS isn’t the only indicator that businesses have weathered the Covid storm in a pretty resilient way. The influx of cash from CBILS has also seen a slowdown in uptake of our other cashflow solutions. Invoice finance, VAT and tax loan uptake are also down across the board, possibly due to the reduction in production and turnover during lockdown, but as businesses look to build back after lockdown and get back in to growth phases, these types of solutions come into their own to unlock capital for marketing, recruitment and other essential costs in the business that enable the growth UK plc is in need of. Give us a call if you’d like to learn more.
The chancellor’s budget has created a real shift in terms of businesses approach to finance and we’ve been recommending many more Hire Purchase agreements to ensure businesses can unlock the super deduction tax savings. That saving means businesses can offset 130% of the value of qualifying assets against their corporation tax bill, an unprecedented move by Rishi Sunak to encourage investment and kick start the business economy post lockdown. HP enables the super deduction savings in year one whilst also being able to spread the payments and keep capital in the business so it’s a great way for businesses to get projects moving in a really cost effective manner.
But alongside that, the corporation tax increase from 1st April 2023 is making leasing an even more attractive proposition. We’re working with a number of PLCs from sectors like big pharma and communications who are now looking at leasing on large scale projects because the Corp tax increase makes leasing a no brainer. For any projects commencing in 2022, spread over 5 years will mean business can recoup 25% of their annual lease payments by offsetting them against corporation tax. On any project ,that’s a gamechanger and more than ever makes leasing the most logical option…definitely not just for businesses who “can’t afford to pay cash”.
So whilst the hike in corporation tax may not be great news for businesses it does make investments more affordable than ever.
We’ve also seen a massive increase in demand for green energy solutions this year. More and more businesses are looking to become more carbon neutral, reduce operating costs and generally become more efficient and environmentally friendly. Whether you’re moving your fleet to electric vehicles, looking to reduce utility costs through solar, LED Lighting or biomass boilers, finance is an absolute no brainer. The savings made from day one often offset the costs of finance meaning you can make the move to being a greener business for a net neutral cost, or in some cases a cash generative position from day one. We work with a number of suppliers in the sector we can recommend, or if you’re already working with a supplier and just want to enquire about financing your project get in touch. We’ll produce some finance models for you based on the forecast savings you’ve been provided with and see just how effective financing your green revolution can be.
Lastly, we’re delighted to have been nominated again in the NACFB Awards’ Finance Broker of the Year category. We won the award last year and it’s fantastic to be recognised for our work in what’s been a turbulent, fast changing and challenging year for the finance sector. Like all things Bluestone, we’ve approached it objectively, ensuring we’ve always put our partners and customers interests at the heart of every change we’ve made to adapt, and making sure we do all we can to look after our brilliant team through what’s been a tough year both in work and out of it.
The changes keep coming but we look forward to helping you build back stronger and making sure your financial strategy is as effective as it can be in delivering your business back to growth.
Thanks for your time, I look forward to seeing you soon.
We are emerging from one of the most heavily controlled and challenging periods in recent history, but while the full societal and economic impact of the pandemic will take time to show itself, UK businesses are facing yet another curveball: ‘The Great Resignation’.
‘The Great Resignation’ is an idea put forward by Professor Anthony Klotz, an associate professor of management at Texas A&M University. Klotz predicted that workers would resign from their jobs in huge numbers once the COVID pandemic is perceived to be over and we return to a more ‘normal’ way of life.
We discussed the topic with Tom Sharp, founder of POST-Recruitment, to discover what (if anything) businesses can do to prepare for (or minimise the impact of) ‘The Great Resignation’.
What’s the theory behind ‘The Great Resignation’?
Before COVID, most people would get up in the morning, prepare to leave their home, commute to a workplace, park themselves at a desk or workstation, stay there until a clock told them that they had finished, commute home again, eat, sleep, and repeat.
Then, on 16th March 2020, everything changed.
Working from home
As the pandemic shifted from ‘media hype’ to a grim reality, Boris Johnson announced that people should ‘start working from home where they possibly can’, and the working from home era began. Initially, we improvised and tried to adapt to it as a temporary situation (hunched over kitchen tables or standing at ironing boards with partners, children and pets taking on the roles of co-workers). Weeks turned into months, and over 16 of them, many of us have made working from home our new normality.
Whatever your personal experience of working from home, the pandemic has opened our eyes and started a conversation. We have seen the benefit of cutting out the daily commute, a more flexible work environment, and a healthier work-life balance. We have found time for hobbies, walking in nature with the family, playing with the kids and being more involved with their education (stressful as it can be). We have bitten the bullet and invested in office furniture for the home, upgraded the broadband, bought home exercise equipment, and found the time to prepare nutritious family meals from scratch. Some people have even added a new baby (or pet) to their household.
Working from home has become normal, so now restrictions are being lifted are employers expecting their teams to return to the old way of working as if the last 16 months did not happen? As if the potentially deadly virus is no longer factor? If so, they can expect a barrage of reluctance or outright resistance.
Psychological impact of the pandemic
Next, add a person’s frustration with their employer refusing to be flexible or showing a lack of concern for their welfare to the fact that they have been living under a constant cloud of uncertainty and anxiety for a prolonged period.
When we feel that we have lost control in an area of our life, it is natural to try and regain it in whatever way we can, and for many, that means changing our job or switching to a new career path altogether. And, thanks to numerous lockdowns, we have had a lot more time on our hands to reflect on our goals and dreams and to discover new interests.
This may push many people to take a professional leap they would not otherwise have taken such as starting their own business or retraining. At the very least, a fresh start in a new job begins to look appealing.
Finally, there will be lots of people who, had the pandemic not happened, would have left their job at some point in the last 16 months anyway, but they decided to hold off until life was more settled and predictable. Now that it looks like that time is coming, those pent-up resignations are coming out of the woodwork.
When we combine all these issues together, the ‘Great Resignation’ looks like more than a theory.
Why should employers be concerned about ‘The Great Resignation?’
Staff resignations are an inevitable part of running a business. They are often a very personal decision and, in many situations, nobody’s fault. However, resignations can also be a warning sign that all is not well, and when a business has a high turnover of staff or several people leaving in a short space of time, it’s wise to indulge in some organisational soul-searching to avoid losing more employees.
When employee turnover rates are high, the consequences can be serious: the organisation loses valuable knowledge and experience, there is a drop in morale for those left, and a potential loss of belief in the organisation’s competence and the team’s ability to perform. Then, when the new team members enter the organisation, they are entering a team that lacks an identity or a sense of collective purpose. Building relationships takes time, and in that time commitment, trust, engagement, and productivity start to fall.
Tom Sharp is the founder and director of POST-Recruitment. He and his team handle recruitment across ecommerce, sales, marketing, creative, IT, business support and finance industries for large national companies as well as one (or two) man bands. We caught up with Tom to find out his take on ‘The Great Resignation’, what candidates are looking for in their post-pandemic roles, and what some companies are doing to retain a strong and productive workforce.
Are you surprised by the onset of ‘The Great Resignation’?
No, there’s a well-known statistic in recruitment that people tend to leave their jobs within 6 months of a significant life event. It can happen even when the employer has gone out of their way to support them, which can be frustrating for the employer. This time, we’ve all been through the same significant life event – the pandemic – at the same time, so it makes sense that the resignations will start to come in at around the same time.
The pandemic really shone a spotlight on employers. The way they responded gave an insight into how much they value their staff and their wellbeing. Some employees were expected to deliver the same levels of productivity without any additional support, while others went the extra mile for their employees from day one.
In other cases, employers were very flexible and understanding towards their employees during the pandemic, but now the restrictions are easing, they are expecting them to return to full-time office-based work and not listening to what their employees want or need. This is particularly frustrating for employees who have proved that they can work productively from home. Eventually, employees will vote for flexibility with their feet.
Have you noticed a shift in what candidates are looking for from prospective employers?
What about employers? Has there been a change in their requirements?
In some cases, yes. We recently recruited for a £70k Leeds-based role. The employer started off saying that they would want someone in the office 2-3 days per week, but then when the right candidate came along and happened to be based in Cornwall, they were willing to reduce that to just one day in the office per month. Geography does not seem to be as much of a barrier as it was before the pandemic. We recruit for several Leeds-based marketing companies who are actively targeting creative professionals in London.
How can employers respond to ‘The Great Resignation’?
If your business has been negatively impacted by resignations in recent months, the first step is to understand why employees are leaving. Some will have undergone personal trauma or a significant change in circumstance which has pushed them towards leaving, and there is very little you can do about that besides showing them compassion and appreciation for their service.
Others, however, will be leaving because they are dissatisfied with something, and if you don’t know what that something is, you cannot make changes that might prevent more people from resigning or that might persuade quality candidates to fill the vacancies left behind.
It is vital that employers encourage their team to be open and honest about their concerns or frustrations so they can focus on improvement in the right places, but here are some of areas that businesses might want to address if they want to retain their staff, and/or attract new recruits.
Flexible working policy
In some cases, employees working from home on a long-term basis may not be suitable for the business model and it is important that employers are clear and upfront about that. If their stance does not sit well with the employee, it may be better for all parties that they go their separate ways sooner rather than later.
Where working from home does not impact the business negatively, it makes sense to continue to give employees the opportunity to work in the way that works best for them. This might mean working at home, in the office, or a hybrid of both.
However, it is important that employers recognise that working from home can have a negative impact on the health and wellbeing of their employees if not done responsibly. In fact, there is a potential risk that employers might be hit with legal action in the future if employees should develop curvature of the spine or other health issues due to inadequate equipment and furniture.
“It can be tempting for employees to work late into the evening or answer emails in their free time, and this can have a significant impact on a person’s ability to switch off from work. We recruit for Asda who have set up time restrictions on emails so that even if someone sends an email at 8pm, it won’t arrive in the recipient’s inbox until 8am the next working day. Communication and collaboration software can also help to keep teams connected, as working from home can become lonely and/or sap employee motivation.”
Tom, POST Recruitment
Technology and software
Communication and collaboration are key ingredients in any successful team. Forward-thinking companies need to give their employees the technology, connectivity, and software that they need to work at their best, whether they are at home or in the office.
Our environment has a significant impact on the workforce’s morale and productivity levels, so if your shared workspace is looking less than its best, your team may be inclined to give less than theirs. For employees who primarily work from home, you might consider offering a furniture allowance or rental system just as you would pay for someone’s travel expenses.
UK Coaching are a great example of an organisation that has invested in a brand-new office space during the pandemic that has been designed to encourage their team to come together, collaborate, and share a sense of cultural identity. Click here to read their story.
Physical health, mental health, and motivation are all inextricably connected. It makes sense, therefore, that companies should consider funding gym memberships, promoting physical activity through workplace programs (e.g., walking meetings, sponsored challenges), running online fitness sessions, or providing home exercise equipment such as treadmills that employees can use during virtual meetings.
Funding your fight against ‘The Great Resignation’
If you are concerned about the potential impact multiple resignations has had, or could have, on your business, or you are trying to attract new recruits, you need to provide them with the environment and support that enables them to thrive.
We know what you’re thinking. All those improvements, sound great, but what post-pandemic business has the cash lying around for a complete office fitout, or to provide new technology, office furniture, fitness equipment across the organisation?
That’s where we come in.
With a bespoke finance solution from Bluestone Leasing, you could invest in new technology, furniture, an office fit out, fitness equipment or other business assets for your team by spreading the cost and keeping cash in the business, as well as potentially unlocking significant tax benefits at the same time.
To discover how a bespoke finance solution could fund the improvements needed to minimise the impact of The Great Resignation’ by retaining and/or attracting the best employees,hit the button below.
If you recognise these words, and the noughties TV character who bit his goateed lip as he said them, you are probably cringing a little right now. Sorry.
But, confused and slightly illogical ideas aside, it is also worth remembering that the same man had previously increased profit in his branch by 17% and cut expenditure without losing a single member of staff (neither of which were his proudest moments, by the way). So, inept and fictional as David Brent was, is there something to be said for a more creative approach to business?
We think so, and have put together a brand new series of articles to put our money where our mouth is.
What do all businesses want? More money in, less money out.
It’s a straightforward concept, but easier said than done. Common strategies include increasing prices, losing staff, expanding your product range, working longer hours, switching to cheaper source materials, or simplifying your service, but none are particularly appealing.
Ideally, your goal should be to increase your income and reduce your expenditure without reducing the quality of your service or product, or impacting quality of life for you or your staff. Some might say that it’s not possible, but with some creativity and the right guidance, we know that it is.
Every two weeks we will be releasing a new chapter with tips, ideas, and innovative strategies on how you can be more creative in your approach to business finance. Each chapter will highlight and explain a different financial tactic that could increase the money coming into your business, reduce the money going out, or both.
At Bluestone Leasing we have been helping businesses across all sectors to grow and thrive through commercial finance for over 25 years, including a few economic recessions and a global pandemic, and we have more than enough experience and expertise to share.
But we won’t be the only ones putting our ideas into the “melting pot” (again, sorry), and we aren’t in the business of preaching where we don’t practice. Several of the chapters will be created in collaboration with clients and partners who are living proof that these creative financial tactics can have a significant impact in the real world of business.
If tips and strategies that will increase the money coming into or going out of your business sounds appealing, click here to subscribe to the Creative Finance series and we’ll let you know when a new chapter has been published.
While most finance brokers are reputable and trustworthy, every industry has its bad eggs. Unfortunately, it is possible to stumble across finance brokers who are lacking in integrity, putting their own interests before what is right for your business, or making recommendations with little regard for how they could impact your business in the long-term.
Whether you are already working with a finance broker and have doubts, or you are considering working with a finance broker in the future, here are 9 red flags that could be cause for concern.
1. They talk down to you
Unless you work in the finance industry a lot of the terminology, acronyms and general jargon can seem complicated. Even people who have been working in the finance industry are continuing to learn throughout their careers. A good finance broker will be able to translate the detail into simple information that is easy to understand, and you should finish your meetings feeling smarter, not confused.
2. They are poor communicators
While a good finance broker is likely to be busy dealing with their many clients, they should still be able to make time for you when they are working on an agreement for you. Brokers who are MIA for days or even weeks at a time and then only offer basic responses are not as invested in your business as they should be.
3. They try to shut others out of the relationship
You might want to include others in your financial discussions whether you have an accountant whose opinion you value or shareholders. If a finance broker attempts to prevent others from getting involved or looking too closely at an agreement, it could suggest they are trying to hide something.
4. They aren’t interested in your business
There is no one-size-fits-all approach to finance and without understanding your business in detail, a finance broker cannot provide the service that you need. The best finance brokers are those who are genuinely interested in your business’ history, present, and future and they will try to uncover as much as they can through research and consultation with you. If your finance broker treats their work like a box ticking exercise, it might be time to find someone with a more personal touch.
5. They say ‘yes’ too much
Every finance agreement is unique which is why the process requires a personal and tailored approach. This also means that sometimes it is not possible to secure exactly what a business wants. Reputable finance brokers will be open and honest from the beginning about what it is realistic, will manage your expectations, and, if what you think you want isn’t appropriate or achievable, they will guide you towards a more suitable solution.
6. They pressurise you into an agreement
Making the right financial decisions for your business is vital to its stability and growth. The job of a finance broker is to get to know your business today and your ambitions for the future, to help you make sense of your options, and, where appropriate, to prevent you from putting your business in financial jeopardy. Your finance broker should inform and explain, but the final decision as to whether to proceed or not is yours alone. If you feel you are being pressured, rushed, or they are ignoring your concerns, take some time to step back and consider your options.
7. They are not FCA accredited
Finance brokers have to be accredited by the Financial Conduct Authority (FCA) if they are providing services to regulated businesses, but not if they are only working with unregulated businesses. However, even if you are not a regulated business, choosing a finance broker who is FCA accredited gives you peace of mind that they are being held to the highest standards by an external body.
8. They are affiliated with a particular lender
Some finance brokers can only offer funding from a particular lender or a restricted group of lenders. This can mean that you are not offered the best possible rates or terms that are available on the market, or that they prioritise a certain lender’s profits rather than what is best for your business. On the other hand, independent finance brokers and those who can access a large panel of funders can offer finance solutions that are in your best interests.
9. They are reluctant to discuss what will happen at the end of the agreement
Once your finance agreement is up and running you will make fixed regular payments over a set term, but what happens when that agreement comes to an end? The answer to that question will vary depending on the type of finance product you have, but you might have the option to return the assets to the lender or finance company, to extend the agreement, or to buy the assets for a fee. It is important that you understand the terms that you are agreeing to, so if your finance broker is reluctant to discuss the end of the agreement in detail, it could be a red flag.
At Bluestone Leasing we’re passionate about helping businesses to grow and succeed. We strive to provide a service level which other finance brokers will struggle to equal, built primarily on long-term relationships, customer success, financial expertise, and innovation.
Our philosophy is to look after ourselves as a team, take care in selecting the best people to join our team, then channel their enthusiasm and expertise into enabling success for our customers. We are not interested in anything other than mutually beneficial finance arrangements.
Highlander Computing Solutions, has been “making IT uncomplicated” for businesses since 1995. The Sheffield-based company initially focused on providing computer support and repairs for local university students, but today they are an end-to-end provider working with businesses all over the UK. Through cloud services, hardware, software, helpdesk support, and project work, Highlander’s growing team can service companies with anywhere from 5 to 6,000 users.
Highlander is one of our partner companies and is one of an increasing number of businesses proactively offering their customers the opportunity to pay via finance, not just when the customer requests it.
We caught up with their sales director, Owen Hanley, to find out why and how they offer finance to their customers.
1. Keep it simple
“Highlander has a desire to uncomplicate through connecting with people, fixing problems and improving outcomes is rooted in our passion for family – not just for our brilliant team and their loved ones, but the entire community of customers we serve and local organisations that we’re proud to partner with. That’s why we like to keep finance as simple as possible whether talking about the potential benefits of finance with minimal jargon, or using clear, indicative quotes to illustrate how our customers could spread the cost of their IT investments.“
2. Include finance on every quote
“Every quote we produce for our customers includes an indicative example how financing with Bluestone could help them to spread the cost, as well as any other financial benefits or tax savings they might unlock.”
3. Make your finance provider part of your team
“It is important that our sales staff are knowledgeable about finance so they can explain the potential benefits to customers. That comes from training and from having access to support and guidance from a finance provider. Our Bluestone account manager, Ben Howe, will sometimes base himself at our offices so he can work alongside us and train the sales team on the benefits of offering finance to all customers, including those that are cash-rich.“
4. Get your finance provider involved in deals ASAP
“Our Bluestone account manager, Ben Howe, is like an additional salesperson in the business. If a customer is interested in finance, we simply wheel Ben in and he does all the heavy lifting from there. We know that our customers are in safe hands with Bluestone, that they will help the customer to make the best financial decision for them, and we will get paid in full upfront. It’s also good to know that if our customers need to fund more than IT, such as a complete office fitout, Bluestone will be able to organise the finance for that too.“
5. Get your finance provider involved in your plans for the future
“Bluestone can arrange finance for just about any asset or growth project, so it’s worth keeping them in the loop when it comes to your own plans. For example, at Highlander we are planning to scale the business in the coming years, including the implementation of a new sales structure, so that we can reach a wider market with our service. Bluestone will certainly be a big part of making that happen.”
Why your business should offer finance
Do your customers have problems paying for their assets or projects? Do you find that customer deals fall through for due to their cashflow or budgetary constraints? Whatever your business, partnering with Bluestone Leasing will give your customers an alternative to paying upfront in full, spreading the cost of their assets over time, keeping cash in their business, and potentially unlocking tax savings.
While this is great news for your customers, it also has some perks for your business too. Offering finance enables you to overcome customer cost objections (£300 per month sounds much more appealing than £10,000 upfront) and in some cases can increase order values as much as 30%. You can also boost your cash flow as payments are typically made within 48-72 hours of the agreement being made live. Plus, finance removes the risk of not being paid by the customer as you are paid by the lender upfront.
Online dating has made it easier than ever for us to connect with other people, but it has also made it easier to avoid going all in on a relationship, even when it offers us everything we are looking for.
Take, for example, these two dating profiles.
Sounds like a match made in heaven, doesn’t it? With so much in common, they could be on track for the fairy tale ‘happily ever after’. That’s why it’s such a shame to think that, because of outdated misconceptions, technology providers don’t always end up with a finance partner.
Finance is the perfect partner for a technology provider, but the love is often unrequited. While tech providers may dabble with finance occasionally, it’s nothing serious. Of course, if they don’t get any better offers, finance is there to fall back on, but for the most part they are unwilling to confirm their relationship status.
The sector has regarded finance as a dirty word for many years based on the belief that mentioning it as a payment option could cause offence to a customer. Surely a customer would only use finance if they cannot afford to pay for their technology upfront? Of course, technology providers have always used finance solutions in their sales strategy, but typically only when requested by a customer.
While this reactive “if and when” approach to finance for technology has been common in the past, it is no longer relevant in the modern world, and it is certainly not the future.
Society is changing, and not just because of COVID. We are more comfortable with the idea of spreading everyday costs via finance, from shopping for cars and furniture to buying clothes online. In a post-COVID economy, businesses want to spread costs, and are less prepared to part with a big chunk of cash if they don’t need to.
Combine all this with the fact that businesses live and die by the quality of their technology, and to stay competitive they need to refresh and upgrade regularly, and the result is a growing demand for finance solutions in the technology sector.
Why do customers choose to pay for tech on finance?
Despite the misconception, it’s often not because they cannot afford to pay upfront. In fact, many cash-rich businesses choose to lease their technology as it enables them to:
Spread the cost of depreciating technology in line with its return and useful life via a manageable payment plan.
Keep cash in the bank so it can be put to work for the organisation rather than tying it up in ageing assets.
Bring projects and growth forward by getting the technology they need without budget constraints.
Reduce reliance on primary funders and access specialists banks they often cannot access directly.
Refresh their technology every 3 years, and return the old so it can be reused or recycled.
Lock in software subscription costs, that would otherwise increase annually, for the duration of the lease.
AND…For private sector customers, leasing provides a highly attractive, fully 100% tax deductible solution. Clients subject to higher tax rates, such as professions, have an even greater benefit available.
Customers want and expect to be able to pay on finance, but what does the provider get out of it?
What does the tech provider get from the relationship?
More and more providers in the technology sector are responding to this shift by proactively offering finance as a payment option for their customers. By doing so, they are not just meeting demand, but also unlocking significant benefits for their business.
Do your customers have problems paying for their technology equipment or projects? Do you find that customer deals fall through for due to their cashflow or budgetary constraints? Offering finance as a payment option can provide a solution to those problems and enable your business to:
Overcome customer cost objections, as £300 per month sounds much more appealing than £10,000 upfront.
Increase order values, as customers typically spend 30% more when they lease compared to using capital.
Protect margins, as customers lose sensitivity to unit costs when presented with a total cost per month.
Retain customers as leasing makes renewals much easier than when dealing in cash transactions.
Differentiate yourself from your competition and add value to your proposition.
Enhance your cash flow as payments are made within 48-72 hours of the agreement being made live.
Remove the risk of not being paid by the customer as you are paid by the bank upfront.
Develop more strategic relationships with customers by getting involved with longer-term investment plans.
Happily ever after
More and more technology providers are moving away from the old-fashioned idea that finance is the topic-that-must-not-be-named – unless the customer brings it up first. They are opening themselves up to the fact that the way customers want to buy is changing. They are committing to finance as a routine part of their sales strategy, making it clear that they can tailor payment options to their customers’ needs, and enjoying the benefits that come with it.
Ready to swipe right on making finance work for your business?
We’d love to be your finance partner
Bluestone Leasing is a leading independent finance provider with access to more than 45 funders, and we pride ourselves on our ability to make finance simple and accessible. Here’s how it would work:
You include a finance option on all your quotes – we’ve got lots of tools to help you do this.
If a customer is interested in finance, all we need from you is a copy of your quotation and the customer contact details.
We speak to the customer and make sure all their questions are answered. If they want to go ahead, we secure the credit quickly for them with no fuss.
We raise the documents, get them signed face-to-face, issue invoice instructions to you, and then get you paid 48-72 hours after everything is delivered.
“Are you crazy? It would be too big, out of control and would burn through everything in sight!”
“But what if it was friendly, fully trained, just the right size for your business, and could bring you exactly what your business needs to grow?”
“Well, I suppose that could be useful. Why do you ask?”
When you hear the word ‘debt’, what do you think of? High interest rates? Bankruptcy? Your associations are probably not particularly positive. We regularly hear phrases like saddled with, crippled by or even strangled by debt, and, for people in the UK, it’s a common ambition to become ‘debt free’ by the time they retire.
But if you are a business owner, this negative perception of debt could be holding you back. Debt can be a powerful tool for your business, fuelling growth and enabling financial agility. Of course, like an adorable yet potentially dangerous pet dragon, debt needs to be handled with caution.
Here we explore how debt can be used as a funding tool to grow your business, as well as the concept of the ‘optimum debt to equity ratio’.
How does a business fund growth?
Almost all businesses reach a point when they need to spend money in order to grow, whether they are recruiting more staff, moving to bigger premises, investing in new machinery, or upgrading their technology. With greater resource and more efficient working practices, the business can increase its revenue and profits. Those profits can then be put towards further investment, leading to again higher revenue and profits.
Businesses have two main options when deciding how to fund that growth, and both routes have their own benefits and risks to consider.
Take money out of the business’ equity.
A business might choose to use their equity to invest in growth. While this can be the simplest solution, especially for cash-rich businesses, this tactic is not without risk. By reinvesting equity into the business, they are locking their cash up and (if you’ll forgive the cliché) placing all their financial eggs in one basket. If the business runs into financial difficulty, or they have unexpected costs to meet, without cash reserves, they might be facing a problem.
2. Borrow money from a bank or other lender.
A business might choose to borrow the funding they need from a bank or lender, and repay it over time. This enables a business to keep hold if its cash and spread the cost of a project over time via fixed payments. Of course, this method typically involves paying interest on the amount borrowed, and businesses need to be sure that they will be able to meet all their repayments comfortably.
However, while there are pros and cons to both funding routes, many business owners believe that option 1, taking cash from the business and avoiding debt is the ‘safest’ way to grow. There is also a perception amongst some SME owners that a business that has debts is not doing well, and they need to clear their debt as soon as possible to be deemed successful.
In reality, debt is an essential funding tool for growing businesses, and when their debt-to-equity ratio hits the right spot, businesses can accelerate their growth without taking on too much risk.
The debt-to-equity ratio
Investors, banks, lenders, and other financial institutions expect – and in many cases – want a growing business to have some debt.
Every business has a debt-to-equity ratio. In simple terms, it compares the level of debt to how much equity is in the business. It is one of many financial ratios (known as leverage ratios) and metrics that can be used by banks, investors, and lenders to assess a business’ financial health.
To discover your business’ debt-to-equity ratio, there is a straightforward calculation using two figures found on your balance sheet. Take your business’ total liabilities (what you owe to others) and divide it by your equity (your assets minus liabilities).
Here are some basic examples to represent how debt-to-equity ratios are calculated.
Why is the debt-to-equity ratio important?
Banks and lenders will usually look at your business’ debt-to-equity ratio when deciding whether or not to lend you money, and someone considering investing in your company would want to assess it before making their decision. To a bank or investor looking in from the outside to assess a business’ financial situation, a low debt-to-equity ratio can mean slow growth and, possibly, that the owners are not investing wisely enough. If a business has a high debt-to-equity ratio, they may owe too much money to debtors and could be in financial distress.
But, outside of those scenarios, is the debt-to-equity ratio worth thinking about?
It is useful for SME not only to have an understanding of this metric (as well as accounts payable, cash flow, accounts receivable, and inventory) to keep a handle on their capital structure and to help them make informed decisions about whether to take on debt.
What is a healthy debt-to-equity ratio?
The simple answer to this question is, it depends. Optimum debt-to-equity ratios tend to vary greatly depending on the sector, and what the business is trying to achieve.
For example, businesses operating in the financial industry like banks and other financial institutions borrow money in order to lend it, and transportation, energy, telecommunications, and utilities often have large capital investments upfront, so their debt-to-equity ratios will naturally work out higher (typically between 10-20).
Technology-based businesses tend to have a ratio of 2 or below, while large manufacturing and stable publicly traded companies have ratios between 2-5.
In addition to considering the average debt-to-equity ratio for your sector, it is important to remember that the debt-to-equity ratio does not tell a business’ entire story, and there are many exceptions to the rule. A business might take on a lot of debt in a particular year, but if the borrowing enables them to fund expansion that significantly increases profits and cash flow is healthy, the debt will be repaid quickly and the company will grow.
Businesses that try to keep their debt-to-equity ratio to a minimum for no other reason than they believe ‘debt is bad’ might be shooting themselves in the foot. If a business can only invest in growth when it has enough cash in the bank to buy the assets or invest in a project (while also covering day to day overheads and keeping a precautionary balance in place in case of emergencies) it follows that the business’ growth is going to be somewhat restricted.
So, debt isn’t always bad for business?
It is common for SMEs to try to stay away from debt. After all, who wants the risks involved with inviting a huge uncontrollable dragon into their business? It’s an understandable fear, especially when personal debt carries such negative connotations.
But just think about what you could achieve if you had a perfectly sized dragon working for you. Burning through inefficiency, hunting for the assets you need to grow, intimidating competitors, and strengthening your defences.
The right dragon, or the right level of debt, can be a sure sign of a growing and well-managed business.
Hayley Mackenzie joined Bluestone Leasing’s marketing team in May 2021. During the interview process, we decided to turn the tables by asking her to interview our managing director and marketing manager about the business and its future plans. We then asked her to turn her first impressions into an article. This is what she wrote.
With so many businesses reeling from the financial hardship and uncertainty of 2020, Bluestone Leasing’s asset finance services and expertise are needed now more than ever. After so much societal change, general distrust of the financial industry, and the undeniable impact that the internet has had on buyer habits, the team at Bluestone have decided to make some changes.
To find out what 2021 and beyond looks like for Bluestone Leasing, I met with managing director, Vineesh Madaan, and marketing manager, Charlie Brook.
Who are Bluestone Leasing?
Starting and running a business can feel like stepping into a fast-moving river. You are using all your energy just to stay upright but, with sinking sand under your feet, standing still is not an option. Now and again an unexpected branch or a strange-looking creature comes downstream, threatening to throw you off balance. You can see the other side of the river and what you need to do to reach it, but every step you take increases the risk of falling beneath the surface.
What you need is a sturdy steppingstone to stand on, followed by another, and another, so you can continue to move forward for as long as it takes to reach the stability of the opposite bank. For 25 years, the team at Bluestone Leasing have been providing those steppingstones for thousands of UK businesses through asset finance.
Bluestone Leasing is a finance broker for businesses looking to develop or expand without parting with a big chunk of money all at once. In the beginning, the company focused on financing technology for businesses, but has since opened its doors to just about every type of business asset you can think of.
Bluestone can provide finance for a wide range of projects valued between £1,000 to £2.5 million, from office technology, furniture, and software to complete office renovations. Whether a family-run chippie needs a new fryer, or a digital marketing agency is embarking on a million pounds worth of office upgrades, Bluestone Leasing can help businesses to spread to cost and keep cash in the business where it is needed.
Why are Bluestone Leasing making changes?
Historically, Bluestone Leasing has grown organically, and their success has been largely due to the team’s ability to create and sustain long-term relationships by providing expert and honest advice. Bluestone are committed to ethical and transparent lending and will never advise a customer to take out asset finance if it is not right for their business. They are not interested in anything other than mutually financially beneficial arrangements.
Unfortunately, in the world of business asset finance, many brokers will prioritise their own profit over what is best for their customer. Due to well-publicised unscrupulous conduct and the numerous scandals that haunt the financial industry, many people are apprehensive or sceptical about dealing with finance brokers. Bluestone want to challenge the way finance brokers are perceived, and to show people that they can be trusted.
How are they going to do it?
To date, the company have not invested much time or money into outbound marketing, but in late 2020 Bluestone Leasing brought on their first marketing manager, Charlie Brook. Charlie has big ambitions for the company, to be delivered through a more proactive marketing strategy.
With greater investment in marketing that showcases the company’s expertise and transparent approach, Bluestone Leasing aim to become the go-to source of knowledge and support for UK businesses looking for asset finance. Whether someone is looking for honest advice about the pros and cons of asset finance, or they have already done their own research and are ready to set up a finance arrangement, Bluestone want to help.
The company is investing in their website to bring multiple software programs, knowledge, advice, and customers relationships together. Bluestone Leasing will offer one integrated, transparent, and accessible online platform to be used by staff, partners, and customers. Bluestone are also passionate about investing in their staff as individuals and giving them the support they need to succeed.
The company’s customer facing team used to be structured according to the type of asset being financed, i.e., technology or furniture, but Bluestone will now have regional account managers. This means that customers and partners will be assigned a particular team member depending on where they are in the UK, so they will deal with the same person no matter what it is that they need.
At the end of my meeting with Vineesh and Charlie, I leave with one question still on my mind. Why did they call the company Bluestone?
I asked if the name has any special significance, or metaphorical meaning, and was told that it was originally called Wise Leasing before being renamed Bluestone Leasing in 2007. At the time, management asked the staff to lead the change by putting forward their own name suggestions. Bluestone was one of many on the table, but Vineesh tells me that it was the most popular and, quite simply, felt like a good fit.
Leaving their offices, I also like the name Bluestone, but I am not sure why. When I arrived home, I looked up the literal definition of bluestone, and it seems to me that there is more of a connection between Bluestone Leasing and its geological namesake than even they realise.
Bluestone is not a specific geological term but is used to describe over 20 different types of rock. What all bluestone rocks have in common is that they are made up of lots of diverse sediments, formed organically over time, and only made possible by the movement of water.
The company stands out against an otherwise dull background. Bluestone Leasing are not afraid to do things a little differently and to stand out in what is often deemed a complex and dry industry. Bluestone know that they are not like other finance brokers, and that is fine by them.
A bluestone rock remains strong despite the fast-moving water around it and can even become stronger because of it. The metaphor only got stronger when Vineesh said, “We want to create a legacy, and to become a firmly rooted company that is not going to be swept away”. Bluestone Leasing have also formed organically over time, and the company is made up of lots of diverse individuals with unique talents. They recognise that, just like bluestone, they grow stronger when they value and nurture the diversity and strength of each person in the team. And, finally, continued success will only be possible through movement, not of water, but of openness, learning, and innovation.
In 2022, Bluestone Leasing want to help more businesses than ever before by financing the steppingstones they need to travel across the river. Through proactive marketing, a more personalised approach to customer relationship management, continued commitment to transparency, and a genuine desire to empower staff, partners, and customers to achieve all that they can, I am convinced that they will succeed.
There are so many positives to choosing an electric vehicle as your company car and an increasing number of them are financial.
The major cost of a company car to the employee is the fact that the car attracts benefit-in-kind (BIK) tax. As this tax is based on CO2 emissions, traditional fuelled vehicles have seen significant increases in taxation as successive governments have sought to penalise the most polluting cars with the highest emissions. At the same time however, the government is constantly looking to incentivise businesses and employees to adopt greener, cleaner vehicles which is why choosing an alternative fuel vehicle, especially an electric vehicle, is so attractive right now.
Let’s take a look at the numbers.
For the tax year 2020/21 the BIK tax for electric vehicles is zero – that’s right, nothing, so no tax liability at all! In 2021/22 it will only be 1% and by 2022/23 only 2%. Compare that to the maximum that some traditional fuelled vehicles can cost their drivers which is a whopping 37%!!
Electric vehicles are also exempt from Vehicle Excise Duty (VED), or road tax to most of us, other than the element linked to the value of the vehicle.
Below is a typical illustration that demonstrates the level of tax savings that can be made:
Golf 1.6 Tdi Match
VED Road Tax (Year 1)
VED Road Tax (Year 2)
VED Road Tax (Year 3)
BIK Company Car Tax 20/21
BIK Company Car Tax 21/22
BIK Company Car Tax 22/23
So, if you are a 40% income taxpayer, by choosing an electric car you could save £8,688 in tax alone over 3 years.
Obviously, as electric vehicles are not running on petrol or diesel, there is also no fuel duty or fuel benefit charge and the overall running costs of the electric vehicle are significantly lower.
Take a look at the Go Ultra Low website which allows you to calculate the cost savings that can be made by making a journey in an electric vehicle rather than a petrol or diesel equivalent.
For the company, they also have to pay National Insurance contributions which are based on the vehicle’s BIK tax band and its value, so they stand to gain too.
Due to the fact that electric vehicles have fewer moving parts than their petrol or diesel equivalents, servicing costs also tend to be lower, estimates are the savings that are available, depending on the model, are 20-30% compared to equivalent petrol or diesel vehicles.
Also from a business perspective, the government also allows electric vehicles to qualify for first year allowance with regards to enhanced capital allowances, meaning that the full cost of the vehicle can be deducted from profits before tax, subject to funding method, please contact us for more details.
What about charging?
There are more than 15,000 public car charging points across the UK and this number is increasing on an almost daily basis. There are also apps available, such as Zap-Map, that allow you to see at a glance your nearest point and to plan your journey.
The Office of Low Emission Vehicles (OLEV) provides grant funding of up to 75% (capped at £500 including VAT) towards the cost of installing a domestic charging station in your home.
The Workplace Charging Scheme also enables businesses to claim a grant of up to £500 per charging socket (up to 20 sockets) towards the cost of installing EV charge points for their employees at work.
Some local authorities have either already introduced or are considering introducing Clean Air Zones. Some of these, including London and Birmingham, will charge private cars that do not meet strict emissions levels. The Ultra Low Emission Zone (ULEZ) in London charges traditional fuel vehicles £12.50 per day for vehicles entering the zone at any time.
Obviously environmental factors are a huge element to take into account when considering an electric vehicle. With zero tailpipe emissions, so no CO2 and no nitrogen oxides, electric car owners can genuinely point to the positive impact that they are making to clean up the air for everyone.
One final big benefit that electric car drivers talk a lot about is the improved driving experience, thanks to the fact that the vehicles are so much quieter and have instant torque.
In times as challenging as these, and with circumstances changing sometimes by the hour, we are extremely aware of the role we can play in helping all our valued customers and partners navigate the choppy waters we all find ourselves in. Fortunately, we are well placed to support you and, in many instances, as indeed many of you who have already been in touch have found, we can help. Here are some important updates for you and reminders of services that may benefit you right now.
Coronavirus Business Interruption Scheme (CBILS)
A number of our funders are partnering with British Business Bank to support this new government scheme and we can assist those of you looking to access the funds available. We have received complaints that some of the High Street banks are proving difficult to work with around CBILS and you may benefit from the agility that our panel can demonstrate. Details of the scheme can be found here but in summary, CBILS can provide facilities of up to £5M for SMEs (up to £45M turnover) across the UK for terms of up to six years with the government covering interest and any fees for the first 12 months.
Get in touch with your Bluestone account manager for more information on how we can help.
If you have used capital to purchase assets over the last few months, you may wish to consider your options in light of these changed circumstances. We can help you refinance the goods freeing up capital to help ease pressure on cash flow over the coming months.
We have seen a large spike over recent weeks particularly around technology financing in the wake of the mass movement to home working. Remember that, in addition to the actual equipment, we can assist you to finance associated costs and especially software licenses and renewals.
The good news is that almost all of our panel remain firmly open for business and are keen to support you and your business to get through the crisis. Naturally there will be more scrutiny across the board and a particular emphasis, when reviewing proposals, on how CV-19 is affecting your organisation but we continue to receive approvals every day for new facilities for our customers. Also, please note that most funders have moved to reduce the length of their credit acceptances from the usual 90/60 days down to 30 days.
As regards any existing facility you may have, it is important that you contact the funder directly in the event that you wish to request payment extensions or any other accommodation on your agreement. We can provide correct contact details if you need them, but our advice is to be prepared with updated business plans and cashflow forecasts in light of the current situation and be reasonable with your requests. Not every funder is able to support such requests but the better presented the case, the more chance you will have. Again, our team are on hand to assist should you need it.
We have successfully migrated 95% of our team to home working over the last few days although technically the office remains open too. You can use the existing landlines which are all being redirected to the right person. We are concentrating as much of our resources as possible on supporting existing clients and facilitating new clients who need to move quickly to secure vital funding to keep their businesses going. Please bear in mind that not all the financial services sector has been able to move quite so quickly and inevitably we may experience delays when we require input from the banks themselves so do bear with us.
It will be 25 years that we have been in business next year and our longevity has, in no small part, been down to the incredible dedication and commitment of our team and the support our valued partners and customers have shown us over the years. Some of you will remember going through the challenges faced post the financial recession in 2008 together and, just like then, you can guarantee that we will be here to support you every step of the way now.
Let’s get through this together and look to a brighter future for all on the other side.
Phillip, Vineesh, Steve and Mark The Bluestone Board