The Catering Equipment Suppliers Association (CESA) is fairly self-explanatory. It was established over 70 years ago and is recognised as the largest and most influential membership association for companies involved in the manufacture, import, export, distribution, installation and servicing of commercial catering equipment. Through this worthwhile association we can keep in regular contact with over 160 of the country’s best-known companies in the foodservice and hospitality sectors.

The European Network of Supplies and Equipment (ENSE) is a newly created buying group, again specialising in the catering sector. ENSE promises its members that they will deliver results through collaborative commitment from distributor members and manufacturing partners. This means they can help to increase profitability for distributors and suppliers alike and their remit is to develop strong alliances towards each other through joint marketing efforts, training and annual meetings.

We’re pleased to be members of both associations, and we can look forward to all of our clients and suppliers ultimately benefiting from these partnerships.

According to its Survey of Small Business in Britain, the Open University Business School places economic climate or demand at the top of the list of most worrying factors to the business owner. Over a third – 39 per cent of respondents – stated that this was the main reason for worrying about the future of their businesses.

Despite the fact that manufacturing SMEs have enjoyed increased output during the quarter, the survey showed that employee levels have remained static. Hotels and restaurants have performed well, while retail firms have reported negative sales and employment balances.

Interestingly, the survey investigated how the effects of new technology – smartphones, tablets and cloud computing in particular – are affecting the way people conduct their business these days. For core business activities such as researching, sourcing products, handling invoices and financial management, more than half – 56 per cent – still rely on static Internet access.

The second biggest worry after the economy, somewhat predictably, is the concern that many have over cash flow, payments and debtors. What the survey didn’t show was how these situations could be considerably alleviated if more small businesses turned to leasing finance as the way forward.

Government regulations, inflation and cost of inputs, tax burdens and interest rates could all take a back seat if SME owners were to turn to the likes of Johnson Reed for help. Then subjects like increased profitability, better cash flow, intact credit lines, better planned budgets and tax advantages could all provide a much sunnier prospect for the harassed business owner.

But what exactly is an SME? According to EU law, SME stands for ‘small and medium-sized enterprises’ (EU recommendation 2003/361, should you need the small print). It is generally agreed that the future prosperity of SMEs is crucial to the economic recovery process, so there has inevitably been much debate about what exactly constitutes an SME.

According to the European Commission, an SME is a business comprising fewer than 250 employees, with an annual turnover of less than €50m. To put that into context, a small business has less than 50 employees with a €10m turnover, and micro businesses have less than ten employees with a €2m turnover.

One thing is common to all of these enterprises though. They all need to grow to stay ahead of their competition, but they all have differing risks, requirements and opportunities. Funding is crucial to all and, although government initiatives are useful for larger concerns, smaller businesses can often find it difficult to secure the necessary arrangements. This is where Johnson Reed can play an invaluable part in their success.

A surefire way to growth is by investing in high-end equipment to maintain and increase output. Because outright purchase costs are prohibitive, leasing it is the logical solution. Improved profitability, better cash flow and distinct tax advantages all combine to make leasing the obvious choice of funding for your company – however micro, small or medium you happen to be in size.

The EIF has offered two schemes that can ‘help leasing companies in challenging times’. One aspect of the programme is a securitisation method for bank-owned and independent lessors to make available between 50m and 100m euros in guaranteed senior debt. This option is available to companies that are typically funded through bank lending and it’s designed to target ‘financial institutions committed to SME financing’.

The scheme is operated by the European Investment Bank, together with the European Commission and various independent financial services companies. The second aspect of the paper explains how uncapped guarantees on 50 per cent of every eligible lease can be provided by the EIF, while the credit analysis, decision processes and servicing will still be the responsibility of the lessor. The EIF has said that it has

“a pool of investors keen to invest in products guaranteed by the EIF with an attractive all-in cost for the originators.”

There are more options to be announced by the European Commission in due course, as part of their mandate to make more EU and governmental funding available to SMEs, so carry on following our news feeds for ways to keep your funding and equipment leasing options open.

Dantes restaurant is located near Chorley, Lancashire, and they wanted to promote their fine dining reputation, as well as branching out with a new Kids Pizza Factory concept, so we advanced £16,000 over a three-year repayment period to enable them to keep bang up-to-date with new kit from the Southport-based Kitchen Equipment Company.

Because we are specialists in the hospitality and catering finance sectors, we were able to point the Dantes owners in the right direction for suppliers to expedite a fast, straightforward deal that would maximise tax advantages for the client, as well as explaining them on behalf of the suppliers who were kind enough to give us yet another worthwhile referral.

Dantes pride themselves on classic Italian cuisine, offered in an elegant and contemporary environment. They only use the finest produce for their clientele, so it was only natural to turn to Johnson Reed for the finest advice and funding for some new top quality kitchen equipment.

With the announcement he said,

“This is a big boost for the small and medium sized businesses that are at the heart of the British economy. The FLS scheme has already reduced the costs of household mortgages and loans for businesses. This innovative extension will now do even more for small and medium sized businesses so that they can play their full part in creating new jobs.”

Good news for Johnson Reed is that the plan is also targeted at lending by financial leasing corporations and factoring corporations. Between us we have injected almost £20bn of working capital into the nation’s coffers every year. With these additional incentives we can carry on doing our bit to provide some more much-needed confidence for the British economy.

Some organisations however are defying the trend and making record amounts of credit available to small and medium sized businesses to help their growth plans. One of Johnson Reed’s own lenders, Funding Circle, is particularly benefiting from help by the government. They commented on their recent figures:

“As the Bank of England released statistics yesterday showing net business lending fell by £4.8bn over the last three months, Funding Circle has been well and truly bucking the trend, and facilitated £10m of business loans over the last month alone.”

They confidently expect an even more positive performance over the coming months.

Because the government is providing 20% of every Funding Circle loan, we are expecting even more funds to be available to Johnson Reed clients throughout 2013. There’s never been a better time to look for sources, other than high street banks, for loans – with terms now increased to cover six-month, two-year and four-year repayment periods.

Now however, HMRC have announced that they intend to make life a little easier for the finance department, or even just the managing director who wears several hats, by relaxing the reporting requirements for Real Time Information (RTI), which is part of the normal payroll procedure. Currently the rules state that payments to employees should be reported on or before the amount is paid to the employee. This has meant additional administration duties for small employers who have to pay employees weekly, or even more frequently, but only process the payroll on a monthly basis.

From now until 5 October 2013, a temporary relaxation has been introduced whereby employers with less than 50 employees who find it difficult to report every payment at the time employees receive it, can now send information to HMRC by the date of their regular payroll, but no later than the tax month (starting on the 5th of the calendar month) in which the payments are made.

HMRC have announced that they “Will continue to work with employer representatives during the summer to assess and understand the impact of RTI on the smallest businesses and consider whether they can make improvements to real time reporting which will address their concerns without compromising the benefits of RTI or the success of the Department for Work & Pension’s Universal Credit.”

However, from 6 October 2013, normal rules will apply, so all employers will need to report PAYE in real time, every time their employees are paid. Businesses would be well advised to check out their commercial payroll software, which is designed to submit PAYE information as part of their integrated payroll processes.

No one wants to fall foul of HMRC who will, if employers don’t refine their business processes, implement automated penalties. So take advantage of the temporary changes, but plan now for a more automated future that cuts down on the drudge of administration tasks, as well as avoiding the risk of being taken to task by HMRC.

“The chancellor has pulled out all the stops with a wide-ranging package of measures to support small business.”

That package features a proposal for UK companies to save up to £2,000 from their NICs. This is clearly aimed at small firms and is seen as a positive attempt to help to create more jobs. When the scheme, called the Employment Allowance, starts in April 2014, the chancellor has said it will benefit ‘one third of all employers’ who will not have to make NIC payments at all.

This move has been hailed as a tremendous boost in helping businesses through the double-dip recession. George Osborne explained,

“For the person who’s set up their own business, and is thinking about taking on their first employee – a huge barrier will be removed. They can hire someone on £22,000, or four people on the minimum wage, and pay no jobs tax.”

Of particular interest to the lease finance industry is the additional announcement by the chancellor that the Treasury is considering an extension to the Funding for Lending programme, whereby bank lending will be increased to firms as well as homes. This comes after recent criticisms of the existing scheme – official figures show that bank lending actually fell during the last quarter of 2012, in spite of the scheme. The way it’s supposed to work is that the Bank of England lends money cheaply to commercial banks, and they then pass cheaper loans on to businesses. But the British Bankers Association has said the decrease in lending has been caused by weak demand. Perhaps the new NIC benefits to SMEs will help to boost overall confidence, so that next year will see more businesses surviving, more jobs being created – and more demand for funds to be borrowed for capital expenditure.