Here in the pages of TechPro we are surrounded by discussions and specifications of smart technology, from tablets to high-powered workstations, servers to SANs, routers to racks and ever-expanding data storage arrays. One thing they all have in common is not technical but it is a constant challenge, especially to smaller organisations — budget. Every IT manager and his colleagues in finance are all too well aware that the timing of the need, or potential competitive advantage, seldom matches the most advantageous financial state. Investment in necessary technology is almost always compromised or postponed to achieve a balanced financial position.
Most of the last decade was characterised by lean times and cash flow difficulties for Irish businesses, in the ICT sector as well as generally. Grenke and our clients have direct experience of those difficult times, because we have been in the ICT equipment financing business in Ireland for more than 10 years. We specialise in leasing contracts for small and mid-size businesses and we work with trade partners, both resellers and distributors. A large part of our success has been recognising and responding to those recessionary problems throughout a time when banks and other traditional sources of business financing were, by and large, simply not in a position to be responsive.
Grenke in Ireland has been trying hard to offer a higher degree of flexibility to our clients than any other finance house. We can tailor leasing solutions to the needs and circumstances of each client. We pride ourselves on a personal, local service which is why we have Dublin offices in both Sandyford and Santry, and in Cork and Belfast. Our ability to do that is underpinned by the financial and trading strength of our German parent company the Grenke Group, a 35-year old company and plc since 1997, quoted on the Frankfurt SDAX exchange.
We are not generally a big ticket finance company, although we can certainly do big ticket items or projects. Today we have more than 15,000 current individual lease contracts on our books in Ireland, with some 7,500 clients and a total of nearly €40 million a year in leases with an average value of about €8,000. That principally involves any type of ICT equipment, typically servers, SANs and some specialist equipment. Our SME business extends also to general office equipment and furniture, telecoms equipment, CCTV and some medical, dental and laboratory investments in specialised apparatus. More recently we have even extended into catering equipment, 3D printing, CNC Machines and mobile phone fleets.
What does flexibility in leasing mean? There are a number of elements, but one that arises quite often is early termination, frequently combined with equipment refresh so that an item or set of technology is replaced by the latest version. Additional finance as required is normal practice for us, either on an ad hoc basis or as part of drawdown against a Master Lease contract. We have even speeded the process up greatly through our new e-Signature facility, which enables clients to agree elements of their lease contract online. In fact, our current speed record from client application all the way through to supplier payment is 31 minutes. This enables a business to draw up a road map for its development and growth but only commit financially as the need arises.
“The financial benefit of our range of services to any business is eliminating the necessity for capital investment in favour of fixed lease repayments — CapEx becomes OpEx. It also enables smaller service providers — and most of the regional companies in Ireland are SMEs themselves — to offer the winning combination of equipment financing and the ongoing service”
Our general route to market is through trade partners but we also deal direct, predominantly, through that Master Lease drawdown. A third line of business is our unique Service Collection facility. In essence, a client can pay for both the equipment and an ongoing service agreement from one of our provider partners. The payment from the client is taken as a single amount with the service element being passed to the partner.
Clearly, the financial benefit of our range of services to any business is eliminating the necessity for capital investment in favour of fixed lease repayments — CapEx becomes OpEx. It also enables smaller service providers — and most of the regional companies in Ireland are SMEs themselves — to offer the winning combination of equipment financing and the ongoing service.
A new finance service aimed at our trade partners is Grenke Invoice Finance, headed by my colleague and predecessor Eoin Christian. It will allow ICT companies to improve their liquidity by converting trade receivables to raise finance. Typically, a company can access up to 90% of the value of its invoices almost immediately. In terms of cash flow, this is like having 90% of your invoices paid within 24 hours.
The business value to a company trading in ICT equipment is that it will have more working capital and can afford to accept more orders and increase its sales, avail of supplier discounts — even for prompt payment — and to grow the business more easily.
Justin Twiddy is managing director of Grenke Leasing Ireland
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