The Materials Handling (MH) team at Investec Asset Finance answer some key questions they’re asked by and logistics companies, on asset and loan finance.
Investec Asset Finance Plc (IAF) recently reached the milestone of writing £2 billion of total financing to over 100,000 UK businesses. Over 8 years, IAF has provided asset and loan finance across a broad spectrum of asset classes and market sectors to UK businesses including SMEs, corporates and professional practices. Investec was also recently listed as the second largest lender to SMEs in Q2 of this year – among the banks using the government’s Funding for Lending scheme - by the Bank of England. Investec provided £136m in funding to SMEs last quarter, most of which was lent by IAF, and the business is continuing to see increasing interest from businesses across the UK who need access to funding in order to grow. IAF’s recent data shows that this rising interest represents a nationwide trend. For example in the East Midlands, manufacturing saw a significant recovery and finance demand for the trucks classification soared 346.7% – the largest increase seen by Investec in any asset class across the UK.
Materials handling team
IAF’s Materials Handling team works with MH dealers nationwide and deal with a high volume of transactions. In order to facilitate this, the team run a comprehensive end-to-end service from a single business platform, making the process more efficient and ultimately, cost-effective. As demand continues to increase, the team has taken steps to improve the service offered to their customers, and as part of this, they have introduced an app that can be used on mobile devices, ios7 and android for the purpose of quick quoting and submission of proposals. Excitingly, dealers will be able to use it while face-to-face with customers in order to provide instant quotes. Investec’s long-term commitment to this part of the market is highlighted by its sponsorship of the IMHX conference in 2016.
At IAF, the team are often asked a number of key questions, including:
Q1. What does IAF’s MH team finance?
A. IAF provides asset and loan finance across a broad spectrum of asset classes and market sectors to UK businesses including SME’s, corporates and professional practices. It manages and processes small and middle ticket deals up to a value of £5 million. The business has a market-leading materials handling team, which fund in addition to all kinds of materials handling equipment warehouse, floor care equipment and are prepared to consider other equipment assets.
Q2. What is the difference between a Minimum Term contract hire and a Fixed term contract hire?
A. AF MH team offers dealers and manufacturers a comprehensive range of products including minimum and fixed term contract hire, hire purchase and finance lease. – A Minimum term agreement will continue for the Minimum Term stated on the contract and will automatically continue thereafter until either party of the agreement terminates the hiring of the equipment by giving at least three months written notice after which the asset should be returned. A Fixed term agreement will continue for the lease term whereupon the asset should be returned
Q3. What are the benefits of a Minimum Term contract hire?
A. Greater flexibility. The asset can be used after the minimum period until such time as a new contract is arranged or could help with a company’s budgetary restraints or simply to aid in matching the needs of your customers’ contracts.
Q4. What is the difference between Lease Purchase and Hire Purchase?
A. A lease purchase is in essence the same as hire purchase, the key word is purchase. It allows users to spread the cost of purchase, at a fixed rate, with title passing at the end of the term. It has the added benefit of allowing users to claim both tax relief (up to certain limits) and the interest element back, provided the business is profitable and paying tax. VAT is paid in full at the start of the agreement. Ultimately, it provides ultimate ownership, while spreading the cost, with fixed payments from the outset.
Q5. How does IAF’s MH team claim back the VAT deposit?
A. An executed copy of the agreement doubles as a VAT invoice and is recognised by HMRC.
Q6. Can a maintenance inclusive package be financed on Hire Purchase.
A. Yes, Investec offers a Hire Purchase product that includes maintenance.
Q7. What is the maximum term IAF will fund assets over?
A. As a general rule the maximum term they would fund assets over is 7 years.
Q8. What is the maximum age of a forklift truck that IAF would finance?
A. IAF is happy to look at any age of asset dependent on its condition. They take into account the trucks history, the number of hours it has worked, the type of application in which it was used and consider the refurbishment undertaken if any, putting together all of these factors to build a comprehensive picture which enables us to make decisions as to whether they can fund the equipment and what they can offer our customers.
Still confused over the need to be FCA registered?
1st April 2014 saw the responsibility for the regulation of consumer credit pass from the Office of Fair Trading (OFT) to the Financial Conduct Authority (FCA). The most frequently asked questions about Consumer Credit are listed below:
Q1. Does this affect my business?
A. Yes, if you engage in promoting finance to sole traders or small partnerships even if a simple introduction or the handing over of a telephone number you are acting as a credit brokerage, an activity regulated by the FCA.
Q2. What is an Interim Permission?
A. If you wanted to carry out the same activities after 1 April 2014 as you did when you held an Office of Fair Trading Licence you need to have registered with the FCA for ‘interim permission’ before 31st March 2014. If you did not do this you are likely to be operating illegally.
Q3. How long will my Interim Permission last?
A. The permission will last until you are invited by the FCA to apply for authorisation or if there is a change to the type of activity you undertake. By the end of April 2014 the FCA will have written to all firms with interim permission to inform them of their application period.
Q4. Is an ‘interim permission’ the same as authorisation?
A. No. The ‘intermission permission’ is temporary used for transitional purposes only.
Q5. What if I don’t have ‘interim permission’
A. If you are to undertake business with individuals and small partnerships in addition to corporate business you must apply to the FCA for official authorisation.
Q6. What if my business only deals with corporate customers?
A. If the only business you refer is corporate business i.e. limited, PLC, LLP or large partnerships of more than four partners and you have no dealings with sole traders or small partnerships then you may not need to be FCA authorised. Investec have an exemption declaration in the event you transact business with only corporate customers. Please contact us for more details.
Q7. What if I am not authorised by the FCA?
A. Financial institutions can only receive referrals from you for corporate business.
• If an agreement was entered into, referred from an
unauthorised dealer, it would be unenforceable.
• Any person who carries on a regulated activity in
the UK must be authorised by the FCA or exempt
(an appointed representative or some other
exemption). It may be a criminal offence if you are
in breach of this.
Q8. How do I apply for FCA authorisation
A. You can apply online at http://www.fca.org.uk/firms/firm-types/consumer-credit/authorisation or alternatively phone the Helpline on 0845 606 9966. The helpline is available between 9am to 5pm from Monday to Friday.