Aileen Boyle became managing director of Braemar Finance last year, having been part of the Braemar story for 24 years – almost as long as the company has been around. Braemar is the trading style of Close Brothers, a merchant banking group that provides a wide range of services including: lending, deposit taking, wealth management services and securities trading.
Having joined the company as an administrator, Aileen’s experience has spanned operations, credit, risk, sales, marketing and customer services.
She spoke to Veterinary Practice magazine about her views on finance in the veterinary sector.
What do you think of the state of the veterinary world?
There’s no doubt that it’s changing and depending on which side of the fence you’re on, it may be seen as positive or negative. Veterinary, like dental, is facing the rise of corporates which is making it harder for vets to get into practice. But independents are seeing a huge amount of wealth creation. And the rapid changes in technology have forced changes elsewhere; we now offer the finance vets need to stay up with the latest technology.
Change doesn’t concern us. We go to all the trade shows, but we’ve seen buying patterns change; vets now attend shows, view equipment and then go home and check online before buying. Years ago, we’d go to a show and come back with millions of pounds worth of orders. People are more considered in their purchases now – we’re seeing fewer peaks and troughs. Buying is smoothed over the year.
We’re always trying to come up with innovative finance solutions that we can offer vets, such as rentals with maintenance, interest free finance, and buy now pay later – all sorts of facilities that make it easier for a vet to say “it’s not a £40,000 scanner, it’s a £500 a month scanner”.
How do you see the state of practice finance?
In terms of risk profile across all the sectors we work in, veterinary is one of the best; there’s been no change to vet profitability – it’s a very safe and secure profession. If I had a child, veterinary would be the first profession that I would like to push them into – and it makes decent profits. There are other industries we cover that are less fortunate and more affected by the economic conditions.
The way that I look at it is that I’ve got a cat, it’s part of the family and there’s no negotiation over treatment. The accounts of vets that I see are very consistent. Dentistry is our biggest area for lending and it’s the most challenging – look at the pound in your pocket today versus that of five years ago, are you really going to turn up for a six-monthly appointment if you’re not in any pain?
In an ideal world, what should practices consider when seeking finance?
The first thing to look at is the useful economic life of an asset. Consider the length of time it’ll be kept – typically, five years is what we find is asked for. Also look at the best finance vehicle – we offer hire purchase, leasing, practice and personal loans and client/patient loans.
If, say, a vet wants to buy a scanner, they need to consider how long it will last and what else they have already purchased using the annual investment allowance (£200,000 in a year) – timing is critical so that the year’s allowance isn’t wasted as it’s a great way of setting purchases against taxable profits. Our team can help find the most suitable product. We can also set up a credit line (called pre-lease) that vets can use to buy products from multiple suppliers. When all the invoices are in and paid, we’ll convert that into an agreement – there’s nothing to pay while the invoices are still coming in. It’s almost like a credit card with a month’s grace before the bill comes in.
When should practices not consider third party finance?
If a practice has significant cash resources and they have a good return on investment, with sufficient cash resources for all other eventualities. It’s just like you or I; if you’ve the money in the bank to pay for a car, then pay for it. But given the current tax regime, you’d need a very good rate of return to make our financial products look very unappealing.
At Braemar, we consider ourselves responsible lenders. Recently, I had a proposal asking for £250,000 for a new dental practice, but the applicant wasn’t in a good position (financially) to borrow as she had substantial personal debt. We told the applicant to clear the debt before borrowing.
Are there any new trends, funding methods or products that practices should be aware of?
One of the most recent innovations is patient/client finance; ours is called Fast Track and we have several hundred clients using the system. It followed on from conversations with vets over their day-to-day credit control problems.
Many treatments are for emergencies and clients arrive with their pet without thinking about how they’re going to pay for it – and there can be a delay in insurance pay-outs. Fast Track can be interest free, which is subsidised by the vet, or interest bearing; either way, it gives the client an alternative to using an expensive credit card or having to leave without their animal being treated. It’s only the last 12 months that it’s been an online product with instant decisions and e-signatures – and 80 percent are approved.
With Fast Track, the vet would act as a credit broker and would need a Financial Conduct Authority licence unless the loan is for less than 12 months and interest free. A lot of practices offer interest free, but there are others who, for reasons such as affordability of treatment, need the licence to help fund more expensive treatments which are interest bearing. The benefit to vets is that they’re paid immediately and Braemar carries the risk of client non-payment – there are no cashflow issues for the practice.
