Tangible benefits

Effective management of the supply chain increasingly means having the right software – a significant investment for any company. But it's an area that traditional financial institutions have shied away from, with obvious cashflow implications for small and medium-sized businesses. One solution is leasing, as Isle of Wight manufacturer AJ Wells discovered when they contacted Syscap. Using one of Syscap's flexible finance solutions, the company was able to install an extensive new resource planning system without tying up working capital, leaving them free to use that money to expand the business.

A J Wells Ltd was established over thirty years ago and is now a diverse business that specialises in the design and manufacture of high quality stoves. They are also the leading UK manufacturer of vitreous enamel products, such as tube and railway signs, as well as importing pumice chimney systems and Cambodian fair trade tiles.

The company remains owned and controlled by the Wells family and now employs around 100 people in the Isle of Wight town of Newport. Recently, they've expanded fairly rapidly, which placed considerable demands on their existing enterprise resource planning (ERP) software.

Managing Director John Wells opted to upgrade to one of the most popular ERP systems, SYSPRO, and went to the world's largest supplier of these systems, McGuffie Brunton. Ideally, Wells wanted to arrange finance for SYSPRO, as he had other pressing demands on his capital, including extensions to premises and new machinery. The banks he approached were lukewarm about the idea, as he explains. “They would have done the deal, but they were reluctant – they don't like financing software, to be honest.”

Out of date
Existing financial institutions are often unwilling to provide finance for intangibles such as software and the training to actually use that software effectively. But in a business world that's increasingly reliant on IT, such an outmoded attitude is unhelpful at best; at worst, it's disastrous.

Fortunately, McGuffie Brunton recommended Syscap, the UK's largest independent supplier of IT finance. Syscap specialises in flexible leasing solutions that allow their clients to obtain the IT they need now, with minimal impact on cashflow.

Wells was familiar with the concept of leasing – “it's the general idea that bankers and financiers always put to you” – but what impressed him about Syscap was their flexibility. “When you're buying software, you're never quite sure whether you've bought enough – enough seats for instance. If we do a deal with the bank, or fund the system ourselves, we're forever buying little bits – and then we've got a little bit that's covered by an agreement and a little bit that isn't.”

Because Syscap solutions are so flexible, unforeseen expenditure can easily be rolled into the main lease agreement. Everything is covered by one monthly payment, which alsoincludes the cost of training, support andmaintenance. Any unforeseen expenditure canbe rolled into the lease, with negligible impacton the monthly balance sheet.

No nonsense
That flexibility extends to Syscap's attitude to doing business. “What I liked about them”. says Wells, “is that they were prepared to talk. They came to see us, they were prepared to be flexible with documentation ... everything I've asked for they've done. For example, I wanted to know what happened at the end of the lease and they were willing to tell us what they were prepared to offer.” Along with flexibility and straightforwardness came financial control, and this was a key factor in persuading Wells of the benefits of Syscap's solution. “We knew almost exactly how much we were going to pay a month for the next five years, so we could look at it and say: we're going to make savings by putting this system in, we know it's going to cost us this much – all we had to decide was whether we could afford the monthly amount. It helped us make the whole decision really.”

It's often hard for manufacturers to plan effectively. Market conditions are volatile, especially if a large number of suppliers or customers are based overseas. By making IT spend more predictable, companies like A J Wells are removing a potentially troublesome variable, and are therefore making it easier to look ahead with confidence.

What's more, ERP systems are now central to the success of all manufacturing companies, allowing them to integrate their business activities and deliver substantial cost savings. And thanks to Syscap, companies do not need to tie up significant capital reserves in order to access those savings.

Moving forwards
Today, the SYSPRO system AJ Wells chose is at the heart of their business, and is used to integrate accounts, manufacturing, distribution and payroll. And by working with Syscap, they have a clear idea what it will cost each month and have freed up their capital to continue their expansion programme.

“I would certainly go back to them if I had a need for any other asset”, says Wells.