As the economy emerges from the COVID-19 pandemic, businesses across the UK are assessing the impact the last two years have had. Combined with rising fuel, material and labour costs, interest rate rises, and inflation at a 30-year high, engineering and manufacturing businesses are feeling the squeeze. <\/p>\n\n\n\n
With more than 1.6 million businesses receiving Coronavirus business loan schemes worth over \u00a380 billion1 since the start of the pandemic and an 87% increase in monthly searches for \u2018business resilience2\u2019, online auction specialist BPI Auctions<\/a><\/strong> has worked with reputable experts to provide advice on raising capital and improving cash flow to support business resilience. <\/p>\n\n\n\n Sell unused assets to release the capital <\/strong><\/p>\n\n\n\n Most businesses will have unused assets on their premises they could turn into capital, but they simply get overlooked as they are no longer used. Just because they are not valuable to you, do not underestimate their value to someone else, says Henry Spencer, Sales Director at BPI Auctions, \u201cThe scarcity of newly manufactured plant, machinery and equipment during the pandemic led to a boom in the prices being secured for second-hand equipment. We saw our monthly engineering and manufacturing auctions returning approximately 31% more than pre-pandemic levels and prices are holding. <\/p>\n\n\n\n \u201cBy selling at auction, from the moment you issue an instruction for equipment to be listed online, assets will sell within a selected short period, often selling 3-4 times faster (on average) than selling privately.\u201d<\/p>\n\n\n\n However, a word of caution from Spencer: \u201cMake sure you are clear on terms and costs before agreeing to any sale. Work with transparent and cost-competitive outlets offering options to sell from your site with no fees on unsold goods. You can quickly eat away at any sale return if you get lumped with costs you didn\u2019t expect.\u201d<\/p>\n\n\n\n Work with an intermediary to find the right borrowing deal for your business<\/strong><\/p>\n\n\n\n If you do not have any assets to sell, you might want to look at leveraging assets you have capital tied up in. This is often the case for CNC machines, lathes and milling machines but where do you start?<\/p>\n\n\n\n Alex Beardsley, Joint MD of ABL Finance<\/a><\/strong>, says: \u201cAsset finance is where a lender agrees to extend a loan in return for taking security over some of your company\u2019s assets. The financing might be based on a single asset, such as a piece of machinery, or a whole series of assets, like a fleet of company vehicles. It is suitable for a wide range of both new and used assets, including equipment, machinery and vehicles, and adverse credit isn\u2019t usually a problem.<\/p>\n\n\n\n \u201cHowever, with a range of asset-based lending products on the commercial finance market, working with an independent commercial finance consultancy to ensure you are aware of all the options is key. They will assess options like whether you should use one lender for the full lending facility or break it down across several to help you structure the best facility for what you want to achieve \u2013 allowing you to make a full informed decision on what is right for your business<\/p>\n\n\n\n Look at alternative channels to turn surplus stock into new revenue streams<\/strong><\/p>\n\n\n\n Over the past two years, engineering and manufacturing businesses have been affected by multiple lockdowns, Brexit, and most recently, Russia\u2019s agenda, disrupting global supply chains with long delays and shortages. Alongside the increase in storage costs, many SMEs have sought new channels to turn surplus stock into working capital. <\/p>\n\n\n\n Henry explains: \u201cIn addition to one-off stock clearance auctions, we\u2019ve also seen an increase in repeat vendors from large plumbing, flooring and timber merchants. Most will use a regular repeat auction sale to complement their existing retail and trade offerings to translate excess stock into cash on a monthly basis.\u201d<\/p>\n\n\n\n Approach an alternative lender directly<\/strong><\/p>\n\n\n\n If your bank has rejected your application for any further borrowing facilities, it doesn\u2019t mean it\u2019s the end of the road. Gemma Wright, Regional Managing Director at Reward Finance<\/a><\/strong>, says: \u201cThe lending landscape for SMEs has changed beyond recognition over recent years and many businesses still don\u2019t appreciate that there is a whole market outside the more mainstream banks. <\/p>\n\n\n\n \u201cBusiness owners need both clarity and confidence from their funders and this is where the alternative lenders set themselves apart. At Reward, we talk a lot about speed of delivery but arguably what SMEs also need, right now, is the certainty of delivery. Alternative lenders like ourselves take the time to understand a business, meet the owners and talk to them about their plans and aspirations. Lending decisions are made by experienced lenders, applying common sense and innovative thinking, not computers and algorithms.<\/p>\n\n\n\n \u201cWhere you are struggling to get the support you need from your existing banking partner, I would always encourage business owners to talk to their advisors to help them navigate through the growing alternative lending market. I am confident that there is still the right support out there for SMEs, the biggest challenge currently is making sure that they know where it is\u201d.<\/p>\n\n\n\n Health check your business first before selling<\/strong><\/p>\n\n\n\n Before you sell any assets or commit to further borrowing, it is essential to make sure it\u2019s the right thing for you and your business moving forward. Business owners are programmed to fight for their companies, but sometimes taking on debt or releasing the capital left in assets might not be the best move.<\/p>\n\n\n\n Rob Adamson, Partner at Armstrong Watson LLP<\/a><\/strong> and a licensed insolvency practitioner, says: \u201cWe\u2019d always recommend seeking financial advice from an accountant or a restructuring and insolvency firm to make sure you\u2019re investing in the best path forward. <\/p>\n\n\n\n \u201cIf a business is operating under too much pressure, there may be other underlying issues that more cash won\u2019t resolve and could even worsen. Even if it’s hard to accept, a different perspective could help you see the longer-term benefits of selling or even deciding to close your business.\u201d<\/p>\n\n\n\n Adamson continues: \u201cSeek out regulated firms, qualified and experienced enough to give you impartial and considered advice. Initial conversations should always be free, and make sure you feel that they\u2019re motivated by the best outcome for you and your business, not what\u2019s best for them.\u201d <\/p>\n\n\n\n Business Restructuring Case Study – Fabricom<\/a><\/strong><\/p>\n\n\n\n Fabricom approached BPI Auctions to auction unnecessary and surplus equipment, including containers, engineering machinery, in-test access & lifting equipment, tools and welding equipment, in order to raise some capital quickly and reduce storage space.<\/p>\n\n\n\n Working alongside the team at Fabricom, BPI Auctions was able to provide a rapid turnaround, with collections taking place just one week after the sale end date.<\/p>\n\n\n\n The auction gained a tremendous amount of interest, with over 300 registrants. The total sales value was over \u00a392,000, and 98% of all items put up for auction were successfully sold.<\/p>\n\n\n\n Henry summarises: \u201cThe past two years have been challenging for all sectors, especially engineering and manufacturing. Not only with lockdowns and restrictions but with the introduction of Brexit and new regulations across industries.<\/p>\n\n\n\n \u201cSelling used, and surplus equipment and machinery through online auctions is an effective and efficient method for businesses to recuperate capital from surplus or redundant items and compliments your business resilience strategy.\u201d<\/p>\n\n\n\n 1. <\/a>https:\/\/www.gov.uk\/government\/news\/final-covid-loans-data-reveals-80-billion-of-government-support-through-the-pandemic<\/strong><\/a> As the economy emerges from the COVID-19 pandemic, businesses across the UK are assessing the impact the last two years have had. Combined with rising fuel, material and labour costs, interest rate rises, and inflation at a 30-year high, engineering and manufacturing businesses are feeling the squeeze. With more than 1.6 million businesses receiving …<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[10269,10270],"class_list":["post-21808","post","type-post","status-publish","format-standard","","category-process","tag-bpi-auctions","tag-raise-capital-cash-flow"],"yoast_head":"\n
2. Monthly search volumes for \u2018business resilience\u2019 from 2019 compared with 2022 according to SEMRush (data correct as of 06\/04\/22)<\/p>\n","protected":false},"excerpt":{"rendered":"