So, we are a week into dealing with requests for assistance and forbearance from many of our customers, most of whom are predominantly involved in servicing television and film production and live events.
The first request came as a direct result of the early cancellation of equipment bookings when live sports broadcasts started being ‘postponed’.
Soon afterwards, this was followed by acknowledgement from customers that bookings cancellations were increasing across multiple drama productions, and clearly assistance was going to be required.
By Friday we had determined how we were going to shape our response and manage the anticipated deluge of requests we were about to receive. At the time, last Friday, what was about to happen appeared to us to be quite clear and there seemed to be only one conceivable response from the finance and leasing industry.
It was obvious to us that the entire country was about to shut down for a period of enforced isolation, which would have an immediate economic effect on all of our customers – and, for that matter, on everyone else too. The cash taps were about to be comprehensively turned off for an indeterminate period.
The pause might be three months, it might be six, it might be longer…..surely not!
We absorbed the terrifying prospect that either the economy will recover, or the problems we actually face are exponentially greater. The crisis could be existential. In which case we need to stop worrying about everything economic and simply concentrate our attentions on the safety and wellbeing of our nearest and dearest for whatever time we have left.
But let’s assume that the human race is not facing an extinction event and instead believe that recovery and a return to our recognised way of life is likely. If that is the case then, as I have said, there seemed to be only one conceivable response from the finance and leasing industry.
As the last week has unfolded, I have been saddened by how far our opinion has apparently differed from many in an industry in which I have worked for the last 32 years. Whilst we have been handling the requests for payment holidays on over 150 agreements in the space of a few days (and growing rapidly by the hour) the approach by most leasing and finance companies has been to treat each request on its own merits.
Now, I have been around for a long time (32 years!) so I understand how the process works when a company finds itself in a spot of bother – maybe a large debtor has dragged its feet longer than usual, or a client has folded owing them money, and they need to ask their creditors for a little assistance. Traditionally, finance and leasing companies will request a long list of up to date financial information and go through a credit appraisal process, possibly even more stringent than the one they conducted to approve the transaction in the first place.
I understand how, in the first instance, these procedures tend to be handled by the dedicated Recoveries and Collections departments so that Credit and New Business teams can be left to keep the wheels of industry turning.
But we are now in different circumstances.
These are not the requests of bad businesses, of delinquent payers, or even of chancers trying to take advantage. These are, mostly, SME business owners looking ahead at their salary bills and wondering how they are going to remain a going concern for the next three months now that the cash taps have been turned off.
And everyone is in the same boat. I am sure there are many brokers like us sharing similar concerns.
Amongst the prescient items circulating recently on social media was a statement that the banking industry had been bailed out 12 years ago and now could be the time for them to return the favour. It is difficult to disagree with this sentiment and, as the finance and leasing industry is directly or indirectly derivative of the banking sector there is certainly an opportunity here to take a lead.
The UK economy is built four-square on the back of the SME community, and the finance and leasing industry is predominantly exposed to the same SME community. So surely, there can be only one conceivable response from the finance and leasing industry.
Adamantean is a young business. We are still finding our feet after three years of trading and so our panel of funding partners is barely 30 companies. Of those 30, one has shown true leadership and taken a clear and unambiguous position, offering its customers an immediate and unchallenged 3-month payment holiday – with the position to be reviewed again in three months’ time.
No complicated application process; no request for up to date accounts and bank statements; no laughable demand for forecasts (Forecasts? Please!); no documentation to sign. Just a simple request via email from ourselves (or other broker/intermediary) and an immediate confirmation telephone call from them to the customer.
Surely this is the only conceivable response from the finance and leasing industry?
Take a bow Hitachi Capital Business Finance for your proactive view, and well done to those others who are getting on with supporting their customers directly in the background. Others are beginning to take a more pragmatic approach as they realise the wave of 100s of requests every day is unlikely to reduce any time soon, and a procedural credit-led approach is simply not practical.
But what of the rest? If you are not supporting your customers in a simple and swift manner in this urgent time of need, how do you expect them to trade out at the other end and continue to be your customers? We all need to consider the long term.
The MD at Hitachi told me, “I want to work in an industry I’m proud of when all this is over…..”