Whilst the greater financial landscape has become defined by long-standing brick and mortar establishments, the work of British SMEs cannot be underestimated. Regardless of their size or scope of their expertise, it is their work which helps shape, change and drive the future of finance. When we think of development and innovation, we look to these businesses to revolutionise best practices, and to deliver effective, reliable and achievable results for their clients.

As such, we at Rigby Capital are delighted that SME News has anounced the winners from their inaugural Finance Awards, with the intention to recognise and spotlight the very best that this crucial and competitive industry has to offer. As an independent awarding body, business size or reach are not the only deciding factors for its nominations. Rather it focuses more on the quality of dedication and innovation within the work done and in forming positive relations with clients.  SME News prides itself on the validity of its awards and winners. The awards are given solely on merit and are awarded to commend those most deserving for their ingenuity and hard work, distinguishing them from their competitors and proving them worthy of recognition.

To learn more about our award, please visit the SME News website (https://www.sme-news.co.uk/awards/finance-awards/) where you can access the winners supplement and find the full write-up on Rigby Capital as 'Best IT Financing Solkutions Provider 2019' on page 23.  

Rigby Capital has appointed a new Chief Operating Officer to help drive the finance company’s ambitious growth strategy. 

Mathilde Saint-Pol, who brings a wealth of experience in finance, product development and strategic funding to Rigby Group’s financial division, will be charged with directing operations across the €226m business, which is targeting double-digit organic annual growth as it seeks to underline its growing status within the burgeoning technology financing & leasing sector.

John Taylor, Chief Executive of Rigby Capital Europe said: “In just five years, Rigby Capital has grown to become a business well on its its way to sustainably delivering an annual EBT of £5m, and with this growing scale, breadth and future planned growth came a clear need to appoint a proven, highly credible operator into the COO role. I am delighted to welcome Mathilde Saint-Pol as the ideal candidate to establish and define this new role as we grow together. Not only is she no stranger to Rigby Group, but she has an unrivalled expertise in the market that we are confident will pay significant dividends."

Having previously worked with Rigby Capital in France following its inception, Mathilde was formerly Deputy Managing Director for Econocom France - one of Europe’s largest independent leasing technology providers – after a 14-year tenure in which she served in a variety of in finance, product development, innovation and strategic funding roles.  In her new role, she will take responsibility for strategic funding and 3rd party funding panel relationships; system and product development; and process control and efficiency is maintained across the business’s support functions.

She joins Rigby Group during a period of sustained growth, having grown over the last 5 years at a rate of 27% pa, to a c£226m (€250m) revenue business today. Its shadow portfolio with over 15 funders is now over £450m (€510m) , and the business is on its way to sustainably deliver £5m (€5.7m) pa EBT aided by its low capital expenditure profile and 100% organic growth focus.  

Rigby Capital both supports and enables a strong inter relationship with Rigby Group technology division SCC regarding finance & lease solutions, but the business has also grown in breadth, both in terms of asset class and routes to market, with over 40% of sales now originating directly or through non group 3rd party relationships.

Bienvenue Mathilde!

The movement towards subscription-based models is fuelling the need for a different approach to IT investment

There was a time when the channel shipped IT products in boxes - and investing in technology meant large, up-front capital payments for hardware and software. This meant that financing was fairly straightforward. You either bought equipment outright or entered into a leasing or rental agreement.

There are always those who prefer to pay by cash. They like to own the asset and not be tied into longer-term agreements. And for some, leasing is perceived as a confusing and complicated world that’s best to avoid.

But for many, leasing offers several advantages – including not having to pay the full cost up-front and having access to higher spec equipment, which might be too expensive to buy outright. Furthermore, the leasing company can often secure a better deal on price and the customer can accurately forecast cash flow and budget for the future.

The business environment is increasingly moving towards an ‘as a service’ economy, however, with the subscription model becoming the preferred means of funding IT investment. Resellers and their customers want to be able to keep pace with technology investments in a more flexible, cost-efficient and transparent way, ensuring optimal return on investment (ROI) for their businesses.

Combine this shift with the current challenging economic and market conditions, with fluctuating exchange rates and uncertain interest rates, and it’s easy to see why resellers and their customers face uncertainty when it comes to investing in tech. The fundamental dilemma is how to combine a customer wishing to pay monthly with everyone else in the supply chain preferring a cash sale?

The mechanics of investment

One answer is to adopt innovative subscription-based funding models, which differ from traditional financing in a number of key ways. For example, one of the restrictions of traditional leasing is it’s very hardware-focused and not easy to include software and services or finance software on its own.

In contrast, ‘as a service’ funding bundles everything together and can include any amount of hardware, software, maintenance, and services, with no restrictions or minimum percentage required of each component. It may also be necessary for businesses to fund services and support only, without the need to include hardware, software or consumables, for instance. It can even be tailored to the specific business needs of each reseller or end-user, meaning everyone can benefit through this added sense of flexibility, as well as by spreading the cost of investment over time.

Unlike a leasing contract, which requires a direct interface between the three parties involved - the customer, the leasing company and the supplier - the subscription model focuses on the supplier-customer relationship.

The funding relationship and related contractuals are shifted into the background, where it does not compete for the customer’s limited bandwidth. Rather than having a tripartite lease, the direct managed service contract is between the supplier and their customers.

Then in parallel, there’s a purchase agreement between the supplier and their funding company that converts the income stream from their customer into a cash sum for them. Revenue for the transaction can also be accelerated to the point of contract. The mechanism essentially consists of two contractually-independent arrangements that simplify the funding procedure and improve efficiency for the customer.

The shifting sands of funding models

It’s transformational because organisations don’t require a big cash outlay that commits them long-term to one product or service. Businesses can keep their options open and be ready to react to the changing business and technology environments by paying a standing charge for the infrastructure, and then using the ‘pay as you use’ utilities approach.

In a climate of increasing macro uncertainty and a challenging market, the as a service funding model helps resellers mitigate both exchange and interest rate risk, plus avoid potential short-term price increases. Once the funding solution has been structured, the repayment profile is locked for the duration of the as a service term, so there is no future currency exchange or interest rate risk after day one. But as always, any offer of a structured as a service system is subject to credit assessment, documentation and pricing approval.

While the way vendors and resellers deliver technology is changing, the importance of financing still remains at the top of the list for any business. It is clear that IT purchasing decisions are being made at a senior level as IT managers work more closely with the well-informed C-suite, who have a greater understanding of the issues and options around IT financing and consumption.

This subscription-based approach is innovative, and over time we’ll see it replace the traditional leasing as the funding vehicle of choice. The challenge for businesses, suppliers and the channel is the same. They will look to migrate away from what they have been doing over the last 30 to 40 years, reflecting the way the IT world is changing.

As published in Channelpro, 2 October 2019

https://www.channelpro.co.uk/opinion/11521/exploiting-the-flexibility-of-funding-as-a-service