Report: how leasing can transform your productivity and profitability

The UK economy has been through a difficult period.

High inflation, a cost-of-living crisis and a staggered bounce back from Covid-19 have all played a part in slowing economic recovery.

But as we look for new ways to bolster our businesses and workforce, leasing is emerging as a path with huge untapped potential.

We commissioned this research to examine the current state of small and medium-sized enterprise (SME) financing in the UK and gain a better understanding of how companies approach vital financial decisions.

We wanted to understand the role that leasing can play in supporting the UK’s SMEs.

Our research shows that while 66% of respondents have considered using leasing, just 4% have followed this route. So what benefits have those who have explored leasing already seen?

What is causing this consideration vs. adoption gap?

And where might leasing help your business?

How leasing is boosting UK businesses and the economy

Of those UK businesses already using leasing, 80% say it helps them budget better, avoids tying up capital, and helps manage cash flow.

Leasing is also helping businesses to become more productive. Businesses in the 10-49 employee category say an average of 20% of their business efficiency or productivity could be attributed to leasing – allowing them to access better equipment and ensure cash flow remains strong enough to react to change.

But it’s not just the smaller side of SMEs benefitting from leasing. Those with 50-99 employees went as far as to attribute 23.5% of their business’s profitability to the use of leasing.

These findings are telling. We’re seeing leasing boost efficiency, productivity and profitability among individual UK SMEs. But what about its impact on the wider UK economy?

Across just 8 of the UK’s key sectors, our research combined with data from the Office for National Statistics shows leasing by SMEs provides an estimated £1 billion per annum boost to the UK’s Gross Value Add (GVA). GVA is an economic productivity metric that can be used to measure the contribution to GDP made by an individual producer, industry or sector. It measures their contribution to an economy, sector or region.

More than that, it’s also driving employment. Directly and indirectly, leasing provides an estimated 15,400 employment opportunities across those 8 UK sectors.

With such a wide range of benefits, you’d be forgiven for assuming leasing is already widely adopted among SMEs. So perhaps it’s time we explore why we’re seeing such a low rate of adoption.

SMEs are calling for more education on leasing and applying for finance

For those using it, leasing is working. But it’s still only the eighth most popular form of credit among UK SMEs.

So why aren’t UK businesses leasing?

Reasons from our respondents range from:

• Difficulty in the process of applying for finance
• The current challenging economic climate
• A fear of losing control over their business.

But the most prominent emerging reason is a lack of information and awareness of the benefits of leasing. 1 in 10 say they’ve thought of leasing but don’t have enough information about it to decide.

SMEs need to know what they are getting themselves involved in – the benefits, the options, and the details. This is reflective of what we’ve heard from our own partners. Many of those who have come to us faced past confusion around rates, terms and the differences between financial products including leasing and renting. Clarity only came after conversations with our team of experts.

As we all feel the pinch in a tricky economy, transparency is the key differentiator for decision makers who are choosing how and where to invest next.

“It’s important to find a leasing company that we can work with so our customers can benefit from a transparent and flexible form of finance that doesn’t mean a large case outlay.”
Bernard Henry, Managing Director, Clarity Office Solutions (Pennine) Limited.

What comes next for UK SMEs and leasing?

The UK economy needs leasing.

SMEs are operating in a difficult market that puts consistent pressure on cash flow, transformation and liquidity. Businesses can no longer afford to part with large lump sums that make them inflexible.

Equipment leasing can help businesses retain vital capital while acquiring technology that can last them into the future – and is often also upgradable. In effect, leasing could well go some way to future-proofing the UK economy.

Now, it’s time for SMEs to embrace leasing and all of its benefits.

This article is just a small piece of the puzzle – our latest Lease of Life report paints the complete picture of UK leasing. The journey has just begun, and the potential is limitless. To unravel the full story and discover the key to your business's financial success, read our comprehensive 'Lease of Life' report today. It's time to embrace the future and secure your SME's prosperity.