The research has shown that one third of UK public sector bodies believe vendor finance will increase over the next three years – in comparison to one fifth for the previous three years. In response to the significant financial squeeze expected within the UK public sector as spending increases slow, Heads of Finance expect a significant increase in point-of-sale finance solutions.
Many public sector bodies are currently seeking to upgrade their ageing technology and equipment base to boost efficiency. This also comes at a time when replacement cycles, particularly ICT ones, continue to fall– leading to a real IT challenge: investment in IT is necessary, but many cannot afford the up-front expense. One way to help make these shortening cycles more sustainable is through financing methods such as all-embracing service contracts and leasing deals.
The public sector is increasingly mirroring the private in the way it acquires depreciating assets – seeing the benefits in asset finance rather than capital purchase. Indeed at a time when efficiency is high on the agenda – Gershon etc – those vendors that can use innovative finance to build ROI models and demonstrate best value for new investment will have significant advantage over those that do not.
Peter Austin, General Manager Flow Business, Siemens Financial Services, has commented on the findings: “Finance is one key area that is under the public sector spotlight at the moment. Resellers need to explain how leasing equipment makes much more financial sense than buying it outright. By offering leasing opportunities, resellers can demonstrate how they can help them to overcome the affordability obstacle.
“Having spoken to resellers who deal with the public sector market, they have been very positive about this booming market. The public sector is eager to deal with vendors who can offer them cost-saving efficiencies, and resellers can really utilize financing to improve their sales pitch.”