Finance Made Easy From Medialease

Founded in the late 1990s, Medialease helps businesses to locate financing options for broadcast and post-production equipment. Paul Robson, Managing Director, answers our questions.

Q: Medialease provides specialist asset finance services to companies working in Broadcast, Live Events and AV industries. Have you noticed a change in recent years of firms taking up a finance package?

A: Most of our broadcast, post and live theatre/concert touring customers have been recurring customers for many years, but they are pretty much all spending more now in 2015/2016 on new or upgraded equipment than any point previously. The confidence is back in the market, in the directors and decision makers of these companies and they too wish to grow their businesses and therefore the need to re-invest is prevalent.

What different finance options are available?
There are a plethora of choices available to many customers, but not all. We offer the full range of leasing services – from straight equipment long term rental to short or long term hire purchase, finance lease arrangements, as well as the more structured off balance sheet financing (akin to PCP contracts on new cars), which can significantly reduce the monthly payments if the customer is buying the right kit.

Recently we are seeing an increase in the customer request to provide 12-month loans on software licenses and SLA support agreements and also now see some larger clients looking to fund the entire contract value for the delivery and performance of a specific contract for services. For example, they might want to be paid upfront for the new equipment which is being purchased for use within a contract for services.

Are these best suited to specific companies?
As a specialist equipment financier we are not restricted by our own bank/credit underwriters but have access to 30 or so lending institutions of all shapes and sizes, with appetites from high risk to super low risk – our rates reflect this variety, to suit all customer needs.

When it comes to financing a client's equipment upgrade or new assets we need to understand something of the assets, so we can apply some risk profile to this, because we are not a traditional bank, looking at straight lend to the company – asset finance is exactly that, asset risk first, company risk second.

I can give you a simple example. A set of broadcast camera lenses will offer a much lower risk profile than say a VFX creator /finishing suite, or a storage RAID-array infrastructure. We take a view on the customer risk of course, as well as on the equipment. We place the customer risk and asset risk with the right provider. Hence why we enjoy such a very low failure rate, which is reflected in the recurring access to funding we have very low rates.

Why would a large corporate broadcaster come to Medialease and not directly to a funder/their own bank?
Some deal with both; they use their own bank leasing arm to borrow against straight forward "traditional" assets they are acquiring and for building work, acoustic treatment, wiring and for OB trucks the chassis and coachworks, but then ask Medialease to fund the more specific technology assets either because their bank don't understand or like such assets as they see this as unsecured lending, or they have a limit to what they lend each client.

In most cases we find the clients use Medialease INSTEAD of going to their bank leasing arm, because the service they receive here is constantly good. We find the solution that's right for them time and time again and because of our wide spread of funding partners, we are able to always deliver a quick and effective solution on every aspect of their equipment infrastructure.

What would be a typical finance package? How do you arrange this with a client?
The client always chooses the equipment and in most cases the supplier they wish to buy from. They negotiate their own deal, we step in then and provide the asset finance solution that they are looking for from 1 to 7-year term. Mainly 2-4 years is common, and dependant on the equipment involved we might require some deposit or some additional security for weaker/newly formed companies. It's a quick process, often same day/immediate response for smaller deals sub £50k value.

It is common now for direct banks to have to perform lengthy Know Your Customer and Anti Money Laundering procedures on customers, directors and shareholders and has become a real hurdle towards getting business done. For 90% of our customers, we don't need to carry out these time consuming and frustrating procedures.

With so much choice available now when it comes to equipment, is it more beneficial for firms to look at rent or finance options, rather than purchase outright? (i.e. Is there a time when finance might not be appropriate?)
Using finance is a must for all forms of rental companies and kit intensive businesses, such as Outside Broadcast and LED digital signage companies. They need to constantly re-invest in more kit, the latest kit, the newest models. Finance over 2-5 years is a really useful way of achieving this need for growth. The same is true if you are trying to grow your business rapidly not organically.

Where a company is perhaps not devouring equipment in such regular lumps, but perhaps using the equipment for 5-10 years before its replaced or upgraded, then it can be preferable not to add debt to the companies monthly cash flow outgoings, but save up over a couple of years and then spend the money on an outright purchase.

www.medialease.com

(JP/LM)