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UK manufacturing sector squanders ?14 million a year on poor IT financing deals
11 October 2007
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Poor IT financing costs UK manufacturing businesses more than ?280,000 every working week.
For every ?1 borrowed to finance IT purchases and leases, 12pence is needlessly wasted on admin costs, charges and paying higher than necessary interest rates.
If manufacturing businesses cut out the broker middleman and
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source IT finance via independent online marketplaces they could collectively increase their IT spending power by ?13.9million a year (equivalent to more than 42,000 PCs).
These are the headline findings of research conducted by financial analysts at Smartfundit.com.
Using proprietary data as well as government and industry statistics, Smartfundit.com modelled the various costs involved in sourcing IT finance, including:
o Executive and administrative time
o Office costs and legal representation
o Broker fees
o Finance provider charges
o Higher interest rates
The costs for three different scenarios – sourcing finance via a broker, via a technology vendor and direct with finance providers – were then compared against sourcing via an online IT finance marketplace to reveal the ‘cost of poor IT financing’.
“Sourcing specialist IT finance can be a complex task, made all the more difficult by the lack of transparent advice and information. Unsurprisingly then, businesses are falling foul of hidden costs and are unlikely to get the best deal possible,” said Suki Gallagher, Chief Funding Officer at Smartfundit.com. “Our research underscores the financial imperative for looking at alternative ways of sourcing finance, such as letting finance providers bid for your businesses online. It’s about time UK businesses took back control and turned IT financing into a borrowers’ market.”
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