Ray Cox: When we left our discussions last time (September issue) you made it very clear that you felt that those who provide funding to your profession need to understand the changes that are taking place and that financial products need to be tailored accordingly. The biggest provider of finance is still the banks … do they understand your requirements?
Henry Hartley: The truth is that cases and situations vary. Our bank has always been helpful with the provision of funding for major projects, but other practices may not be so fortunate.
RC: I know what you mean. We provide a service that helps practices prepare business plans and these are invaluable when it comes to getting bank support. But I agree that not all banks are the same and you are fortunate these days if you have the kind of personal relationships that used to be par for the course.
Gareth Cross: Essentially, I see banks as “big ticket” lenders. Being realistic, they are not going to commit vast resources to understanding the way veterinary practices run. And why should they? If we want big money, they want to know that we’ve done our homework and can provide them with sufficient security if things go wrong. That’s about it.
RC: So you do those things: is success virtually guaranteed?
GC: No. It’s as Henry says … it varies. If, for example, you have a central hub surgery and you want to fund the establishment of one or more branch surgeries, you may well be advised to seek funding outside of a mainstream bank. You could even get better terms and a more considered solution.
RC: I think you’re right. We can certainly source substantial funds and often our terms are better than major banks offer. The Self Invested Personal Pension route is really worth considering too for funding new build so it’s always worth asking. But what about some of those other issues we touched on brie y? How do you think we can help?
HH: For many independent practices the main problem is bad debts. I’m not saying that people set out to defraud us. It’s simply that for all concerned, the key consideration is the animal’s health. This is what we focus on. Payment, and the ability to pay, comes second. Sadly, payment sometimes does not come at all. And very few vets like to chase their debtors through small claims courts.
RC: How do you think this can be resolved without it having the potential for adversely affecting relationships?
GC: What is needed is a “customer payment plan” that guarantees the practice is paid for the work it does and removes the stigma that can be associated with chasing for payment.
RC: Would you see this as something you could offer all your customers as a matter of course?
GC: I think so. It would certainly make life easier.
RC: Let’s talk about some of the other areas you touched on where funding could be tailored to meet specific requirements. You mentioned vehicle purchase.
HH: Yes, motoring costs are always a concern at all levels. It’s all well and good to have schemes for fairly expensive cars and it’s understandable why these are pushed; but staff in many vet practices cannot afford luxury motors. Having said that, they have to have a reliable car that they can afford to run.
RC: That’s certainly something we can look at.
GC: That would be helpful and as we mentioned so could the provision of business loans for veterinary nurses looking to buy into practices.
RC: Is this a growing trend? I see that Vets4Pets are promoting joint venture partnerships to nurses on their website.
GC: I have heard of a few instances of nurses looking to buy into independent practices, too.
RC: That makes sense. I imagine they’re often more settled in the area than the actual vet. Once again I am sure that we can meet this need without too much difficulty. Are there other requirements within the profession for similar funding?
HH: The corporates offer a range of joint venture opportunities to vets and to take advantage of some of them requires finance to be found. Obviously, vets who make the decision to go with the corporates are buying into a particular business philosophy and do not need business planning advice and support. Associates wishing to buy into independent practices, however, would certainly benefit from a more personalised service, tailored to meet individual needs. I think that such a service would encourage and motivate a lot of younger vets who may be struggling to move forward at the pace they might wish.
RC: Is it the case that many younger vets struggle to get together sufficient money to buy into a practice?
HH: By and large I would say yes.
Of course it varies from practice to practice and region to region. What I would reiterate is that a more case-by-case approach by funders would not only help young vets but the profession as a whole.
RC: That’s an interesting observation that we can work on. I would agree that everyone’s circumstances are different and you simply have to offer schemes that allow for flexibility.
GC: Perhaps we should end by assuming that with all the new initiatives you will be providing, we will all require advice on where to invest our wealth?
RC: I’ll do my best. We are in the process of developing products that will address most, if not all, of the areas you highlighted and I will take you through these next time. And I do happen to know one or two people who might just be able to give you wise investment advice!
- In the final part of this series Ray will detail the products being developed as a result of these discussions, together with additional market studies and research.