Investec’s Andrew Woodward believes that while UK businesses need to be mindful of the bigger picture and take steps to protect themselves from risks such as FX and importing tariffs, leaders must continue to focus on the specifics of their particular businesses.
“The materials handling industry is a good bellwether for the economy and in particular the confidence at any given time due to the fact it covers so many sectors from manufacturing, warehousing, distribution, wholesaling, retailing amongst many others,” he says.
He continues: “Our job at Investec Materials Handling is to ensure there is a viable funding option to facilitate the rental and hire of materials handling equipment throughout these ups and downs. We will consistently work to offer finance facilities that reflect the needs of both end users and suppliers – and that means being innovative.
“For example, we’re working on things like low start rental profiles, subsidised finance rates via supplier relationships, seasonal payment profiles to suit the needs of the end user’s business requirements, deferred VAT for HP agreements and stage payments. In fact, we’ve completed agreements that have involved each of those in the last 12 months.
“We have a specialist team with long established relationships and industry knowledge, and we’ve now provided more than £275m in finance since we launched in January 2014. We are thoroughly committed to supporting our clients no matter what events unfold over the year ahead.”
One of the ways in which the uncertainty over Brexit has manifested itself is in the state of the national currency. Volatility has been steepening over the past few months as the market wakes up to the prospect of a messy exit.
“In some ways, the past couple of months have been a return of 2016 in the lead up to the UK referendum,” says Investec’s Jonathan Pryor. “Things will remain interesting – or complex – particularly if we head towards a ‘no-deal’ Brexit. Some of the shock is being priced in. The options market, which can serve the barometer for how market participants are viewing the likelihood of volatile world and market events, has caught on to the tornado of comment surrounding the circumstances of the UK’s exit from the EU.”
So what can those in business with currency exposures do to sleep easier at night?
“Internal factors can be controlled, such as budget costs, currency forecasts and the general logistics of Brexit planning,” says Jonathan Pryor. “Externally, though, we are working with clients to come up with solutions that can guide them through any event risk in a cost-effective way and allow plenty of flexibility for their foreign exchange requirements and for their business over the coming months.
“Many of our corporate clients are now making use of what’s called vanilla options to shelter them from the collateral damage of a breakdown in negotiations. In effect, these options act as a proxy insurance policy to a collapse in sterling, giving businesses the option – but not the requirement – to access currency at a given rate. Such a flexible approach requires the expertise and resource of banking partners who understand your business and objectives. This is and will be vital to navigating your business through choppy markets and political instability. There is a feeling of déjà vu around Brexit and heightened market anxiety but while politicians may dither, at least you can take a proactive step to mitigate currency risk for your business.”
Investec Asset Finance plc is sponsor of IMHX 2019 – the International Materials Handling Exhibition. The event takes place at the NEC, Birmingham, on 24th-27th September 2019.