The Leasing Foundation: Mike Randall – The future for asset brokers

Asset finance broking in the brave new world

A Q & How has COVID-19 changed the asset and leasing landscape? COVID-19 has changed everything. A large proportion of business has been suspended whilst the pandemic plays out. There is a percentage of firms in essential services that have kept their doors open and seen business increase, but many companies have furloughed their staff and therefore are not purchasing assets at this time. Businesses are waiting to see what happens once lockdown finishes, and things start to recover before they think about investing again. They will also need to consider how they can restructure their finances post-pandemic. What are the main issues that have faced the sector during this time? The key challenges for brokers and lenders are centred around trying to understand how to deal with a pause in the economy. This includes a decrease in credit appetite in certain sectors from a lending perspective which obviously leads to cashflow issues. In addition, all lending businesses are looking at ways to partner with potential government schemes to help SMEs. How does today’s situation differ from the crisis of 2008/09? What can we learn from that time? It is all to do with supply and demand. This crisis differs because in 2008 there were supply issues in terms of people’s liquidity. Now it is a demand issue. Supply is there but there is no demand as the economy has been ‘shut down’. Also, in 2008, the government took far longer to support the SME liquidity issue. This time around the government acted far quicker with the likes of the CBIL and BBL schemes. How can brokers and lenders respond and protect themselves? From a lending perspective we need to be there for our customers, guide them through forbearance and help them apply for the government support schemes. From a broker perspective, it is all about sticking close to customers in this time of need and partner with funders to work through the scenarios together. Customers are at the centre of this and if all parties work together, there will be a better outcome post-pandemic. What do we expect to see in the coming months? What we would like to see is the number of COVID-19 cases and deaths reduce significantly, no second wave, businesses going back to work successfully and maintaining the safety of everyone involved. This is the beginning of innovation – how companies work together in the future to help business come alive again. Are there any positives we can take from this situation? The last four months have been very tough for all businesses. But the situation has probably made every business look at itself in terms of how it operates and how it can make the safety of its people a priority. It will also have made companies look at their tech capability and how to be more innovative which helps all customer journeys. What are the successes and failures of the last four months? The key success is the way all funding businesses have stepped up to serve customers remotely. The industry has helped customers with forbearance in numbers never seen before. However, should we, as an industry, have been better prepared for a crisis of this scale? That will be the question. All businesses have business continuity and disaster recovery plans, but could we have done any better in our planning? Are there any other practical steps that we should be taking? Aside from working closely with customers to ensure that their businesses’ cash flow can stand an economic slowdown for a period of time, we should try and be part of the core management team of a company – helping customers decide how to operate post COVID-19. It’s all about being part of their journey and in the engine room of decision making. Operational models are likely to look very different in the future and we are here to help them through this process. Mike Randall Chair The Leasing Foundation