Manufacturing Firms Turning to Specialist Asset Finance to Help Fund Growth
The UK manufacturing sector continued at a steady level with output fractionally up in March compared to February’s figures and manufacturing production having risen yet again. Whilst there has been a moderation in orders, the outlook for the UK manufacturing industry still looks positive after 20 consecutive months of growth, say manufacturing organisations, as firms increasingly turn to specialist asset finance to fund investment in new systems.
The latest IHS Markit/CIPS survey showed that manufacturing output remains robust and above the historic average, with a more competitive pound and buoyant global economy both cited as reasons for growth in manufacturing output.
At the same time, the manufacturers’ organisation EEF says that, while the pace of manufacturing production has slowed slightly, activity is still on the up and that UK manufacturing is still growing at a healthy rate.
With order books holding up, manufacturers remained positive about the business outlook. Almost 56% of companies forecast output to be up in a year’s time, compared to only 6% who expected a decline, with the degree of positivity remaining close to January’s 28 month high.
How are firms funding the rise in production?
Although there is still some way to go before UK productivity catches up to all its G7 counterparts, many manufacturers are taking steps to make this happen by investing in automation and exploring the opportunities presented by Industry 4.0.
Commonly referred to as ‘the fourth industrial revolution’, Industry 4.0 is the current trend of automation and data exchange in manufacturing technologies. It includes cyber-physical systems, the Internet of things, cloud computing and cognitive computing.
To capitalise on the opportunities available through Industry 4.0, many businesses are turning to specialist asset finance facilities to invest in new manufacturing equipment. This is a way of protecting their working capital which can then be used to support the growth opportunities that have been identified.
This trend was confirmed by the Bank of England in its lending figures for February, which showed a steep rise in manufacturing finance for investment, maintaining a trend that started last April.
Rise in business equipment finance
The increase in manufacturing finance was further underlined by the recent figures from the Finance and Leasing Association, which revealed record asset finance levels by its members for 2017.
The asset finance industry saw a highest-ever level of new business – almost £32 billion in 2017 – with many sectors witnessing growth across the board.
For example, new asset finance for business equipment was up by 7% to more than £2.5bn and proved especially popular amongst smaller companies and SMEs. Meanwhile, finance to fund new plant and machinery purchases grew by 12% to £6.617bn last year.
The latest figures also reveal that specialist asset finance is a vital source of funding for SMEs when investing in business equipment and machinery. Of the total asset finance new business in 2017, £18.6 billion went to SMEs, which was 12% higher than in 2016.
Growth in finance
In recent years, manufacturing finance and equipment financing have grown significantly as more and more companies have become aware of the benefits offered by this flexible, cost-effective, risk-managed form of financing – particularly businesses that have looked for alternative methods of funding to the traditional bank loan.
Investing in new manufacturing and business equipment can be a big decision for any business, and it makes good business sense to think carefully about how best to finance your investment.
Specialist asset finance, by its simplicity and flexibility, is suitable for all types of business from start-ups and SMEs to existing businesses investing in new equipment and up to major companies investing in major new plant and machinery.
A significant reason for this, other than the available tax benefits and the ability to budget more easily, is that typically the equipment itself can be used as security, which makes manufacturing and equipment financing a very accessible form of funding.
Seek expert advice
Finding new manufacturing finance and equipment financing should be straightforward and a good asset finance broker will be able to steer you along the right path to find the most suitable solution.
At Anglo Scottish, our team of specialists have years of experience as asset finance lenders to a variety of businesses from different sectors.
These include but are not limited to:
- Manufacturing finance
- Business equipment finance
- Plant and machinery finance
- Construction machinery finance
- Agricultural equipment finance
- Printing press equipment finance
We can help your business develop, supporting you in financing new equipment, or replacing old and obsolete assets that might be holding your business back.
When it comes to manufacturing finance and equipment financing, the team at Anglo Scottish can offer the expertise, experience and support necessary to organise, set up and manage any agreement.
As experts in specialist asset finance, we also pride ourselves on understanding any business sector, whether it’s manufacturing, construction or many more. Our specialist knowledge enables us to make the right recommendations and assist you to get the most from your asset finance solution.
If you want to find out more about your manufacturing finance and equipment financing options, then please get in touch with Anglo Scottish Asset Finance today