Taking the rise with no-nonsense leasing

Vendors need to simplify their financial proposition in response to the recent interest rate rise, writes Philip White.

The Bank of England Monetary Policy Committee has been flexing its muscles with its recent nominal interest rate hike, designed to test our mettle as consumers, home-owners and credit-card junkies.

Financial commentators have been in their element since the announcement, speculating on the wider implications of a 0.25 per cent rise, and second-guessing the Bank's next moves.

There is broad agreement that this rise marks the beginning of a general upward trend. It is also a fact that a rise in rates is an effective if rather blunt instrument to curb consumer spending. But let's look at what the news might mean for you.

After all, the idea of customers tightening their belts is not exactly unheard of in the vendor community, which is already operating in an environment marked by caution when it comes to significant capital outlay.

The trouble with rising interest rates is that they tend to scare people more than other budgetary changes. They are an unknown quantity, and no one is ever sure what the long-term effects will be.

This is particularly true in this era of low interest rates, where even the smallest increase seems to generate quite a significant level of anxiety.

So how can the dynamic vendor respond to this news and prepare for the nervous customer who might use it as yet another excuse to delay their IT spending for another year?

Addressing customers' fears head-on might make all the difference, and offering a no-nonsense leasing agreement could help you to do just that.

When interest rates are going up it is time to simplify your finance proposition to something that feels safe, secure and predictable.

A lease can be arranged with fixed payments so it won't be affected by further increases and your customers can still keep their budgets on track.

It is true that rising rates can make it difficult to plan ahead, which can encourage businesses to cut spending until they feel the economy has settled down.

However, with a general upward trend, the interest rates aren't going to get any more favourable when it comes to borrowing money.

This means delaying spending on IT is likely to be a costly error, and customers would be wise to arrange a lease now, with only a nominal interest rate rise, rather than waiting and having to borrow at an even higher rate.

In the midst of this economic uncertainty, leasing helps to ensure neither you nor your customers lose out.

You get the business, your customers get their IT and you both enjoy financial peace of mind - whatever the Bank of England does next.

Philip White is sales director at Syscap.