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Optical Finance Q&A with Colin Cornish

As we enter a period of recovery following the pandemic, Colin Cornish, Braemar Finance Area Sales Manager, provides his view of the current market and explains the finance options available to the optical profession.

What level of finance can Braemar Finance offer practices?

We can provide facilities from £1,000 upwards with terms ranging from 12 months to seven years.

What are the most common purchases that you provide finance for?

Typically, we help practices finance eye testing equipment (OCTs, Fundus Cameras, Slit Lamps, etc.), glazing equipment, general retail or computer technology or any other business critical assets. We will also provide finance for practice fit-outs and refurbishment costs. Additionally, we can provide Business Loans to cover costs like partner buy-ins, goodwill, tax and so on. All our facilities are available to new starts and established businesses.

How has Coronavirus impacted on practices wanting, or needing to use finance?

Coronavirus has impacted each practice differently, so it’s my job to ensure we understand the individual circumstances of the practice so that our solution is tailored to their requirements.

However, we have seen some general trends, in particular regarding Opticians’ relationships with their banks and the support they received during the pandemic. We recently surveyed Opticians and 68% reported they had been refused access to bank funding during the pandemic and 60% reported they are considering changing banks.

Having exited lockdown, are practices looking to upgrade their equipment or facilities and access finance?

It is probably too early to detect a clear trend on future spend, but the pandemic has caused most businesses to re-evaluate how they trade and interact with patients and support the wellbeing of staff.

We are seeing investments in digital solutions and restructuring practices to be Covid secure. Where unexpected, and therefore unbudgeted, costs arise, working with a finance partner who can support you through the challenging times can often be the differentiator for a successful business over the long-term.

What support can you provide to practices who aren’t sure about the best way to invest in their business?

The choosing of clinical equipment is a highly technical decision, and there are many supplier choices. As a finance provider our role is primarily to provide a commercial and financial framework that will allow the practice to acquire the right equipment. And additionally, have the capability to work with the chosen supplier – of whom there are very few that we have not worked with.

Does finance make sense in terms of return on investment (ROI)?

The pandemic clearly demonstrated that having a cash reserve for emergencies and unforeseen events is good business sense and practice. Using finance enables two crucial things:

  • An ability to make essential spend and provide maximum benefit to the practice when it is needed, but also,
  • To defer the cost over time, so that cash is conserved and, since few acquisitions give a 100% ROI from day one, more accurately reflects the nature of the investment return over time.

What other financial benefits are involved in using the services of Braemar Finance?

Depending on the nature of the asset, financial status of the customer etc. there is often more than one financial solution that may be appropriate. We have a strong history of supporting our customers, no matter the prevailing economic lifecycle, because we are specialists in our chosen sectors.

The advantage to our customers of partnering with a direct lender who specialises and understands their business is that we can use our experience to ensure that the necessary and appropriate information is provided. Our customer is then able to discuss this with their accountant to ensure the proposed financial solution meets with longer term tax or business planning objectives.

In terms of specific benefits:

  • All our facilities have fixed payments - which allows for ease of budgeting
  • Initial payments can be structured to allow for lower initial payments in the first three months or so, which is particularly useful for start-ups
  • Finance Leases are a common product for the optical sector, as unlike other products the VAT element can be spread, and paid, over the duration of the agreement. This helps Opticians stay within the annual VAT de-minimus level. Finance Leases are wholly allowable against taxable profits and so future lease payments can be offset against tax in future years
  • However, Finance Leases are not the only option and in certain circumstances, where either VAT de-minimus is not a concern, or the equipment is fully allowable for VAT purposes (e.g. glazing or display equipment), then products such as Hire Purchase (HP) may be more appropriate. HP comes with a different set of tax advantages, in particular, the ability to offset 100% (or currently 130% for a Limited Company) of the capital spend against the taxable profits in the year of purchase

Are there any other benefits to acquiring new equipment, both for staff and patients?

Staff and patients are reassured when they are in an environment where practices are using the latest technology and modern equipment. It is important that staff feel they have the best equipment to provide the optimum clinical support to patients. This equally resonates with patients as they will be aware of the advertising offering the latest clinical testing equipment at large competitors, and so re-affirms their choice in their preferred optician.

Colin Cornish is one of seven Area Sales Managers in the UK, providing local support to clients with a region that covers North London and Anglia, and has been with Braemar Finance since July 2013.