20/6/07

Financial flexibility from Syscap gives Digby Brown room to move

Like many companies faced with the financial and logistical nightmare of relocating, legal practice Digby Brown also had to contend with the cost of an extensive office refurbishment. Even with a substantial rent-free period, the additional cost of refurbishment required careful thought and planning. Digby Brown realised that a conventional loan or lease agreement would not be best suited to their needs, so asked professions finance specialists Syscap to create a flexible and bespoke lease agreement that allowed higher upfront payments and lower, more manageable payments once the new property rental period began.

Digby Brown is one of Scotland’s leading personal injury legal practices, with offices in Glasgow, Edinburgh, Dundee and Glenrothes. Concerned that the lease on its Edinburgh office was coming to an end, the company decided to relocate to a different part of the city and found an ideal office space within a recently renovated building. The offices would require complete refurbishment, but as an incentive to prospective tenants, the landlord was offering a tempting rent-free period.

Rent-free offers are commonplace for office relocations, since landlords understand that it is often the only way companies can afford to move. In the case of Digby Brown, this meant 18 months without paying any rent on its new Edinburgh offices. The company naturally wanted to make the most of this payment window by channelling the money it would have used on rent into the refurbishment project instead.

Financial stability

Digby Brown needed to maintain a healthy cashflow during what would be an expensive period of relocation and refurbishment and decided to find a way to pay for the work over time. “I thought we’d just go for a straightforward loan from a financier, but once we had agreed the terms with the landlord, I realised we would do best to find an agreement that would enable us to load the payments at the start of the term, when we could afford to, so we could reduce the cost of our remaining payments,” explains Jim Wright, Director of Finance at Digby Brown.

Digby Brown needed to find a finance partner able to create a completely bespoke arrangement, with variable payments to suit the company’s particular needs. But many standard finance companies are unable to offer such flexible terms, especially on an agreement covering the range of items needed for such an extensive project. Wright and his colleagues contacted several finance providers and discussed their plan to load the payments towards the beginning of the loan agreement – but none of them could help.

Right on time

Wright was beginning to wonder if he was expecting too much from the finance industry, but then took a phone call from Syscap. “Syscap had been in touch from time to time to find out how the business was going and what we might need in terms of finance,” says Wright. “They knew about the relocation project and contacted me as a reminder about their services just when we were considering our options. I explained our dilemma and they simply said: ‘No problem. You tell us what you want to do, and we’ll do it.”

Syscap is the leading independent finance and leasing supplier to professional practices in the UK, and has helped over 10,000 of them stay competitive with flexible finance solutions. As specialists, Syscap has a thorough understanding of how practices are regulated through their professional bodies and the implications affecting finance and leasing, delivering comprehensive and bespoke finance solutions that enable businesses to fund a wide range of expenditure cost effectively and without disrupting cashflow.

Bespoke solution

Syscap explained that instead of using a loan, there were greater tax advantages for the company if it chose a sale and lease back option. By this time, Digby Brown had completed a comprehensive tender process and chosen interiors and logistics specialists Wagstaff to undertake the refurbishment project. Competing against five other companies, Wagstaff’s win was a result of its competitive pricing, at £300,000, its design and presentation and ability to supply exactly what Digby Brown was looking for. “With Wagstaff on board we had a better idea of the figures, so we asked Syscap for a lease where we could pay £15,000 for the first 15 months, then pay whatever was left over the remaining 21 months of the lease agreement,” explains Wright.

Syscap created a tailor made sale and lease back solution to cover the entire refurbishment, as well as building costs, even including an interim draw down facility to enable Digby Brown to pay Wagstaff as and when it issued its completion certificates. In addition, a further £50,000 was added to the lease agreement at the last minute to pay for carpets and air-conditioning. “At our request, Syscap was able to treat that as a further upfront payment on month one of the lease,” explains Wright. “That gives us a huge financial advantage as that entire £65,000 payment will be tax deductible.”

Faultless service

Syscap and Digby Brown had just three months to arrange the terms of the agreement and complete the necessary documentation. Syscap’s regular communication and prompt responses ensured that the agreement was completed with two days to go, even though Syscap had managed to extend the deadline for another month just in case. “I can’t fault Syscap’s customer service at all,” says Wright. “We have a dedicated account manager who understands exactly where we are coming from and everything worked as he said it would.”

Now happily relocated to its new offices, the team at Digby Brown has set its sights on a technology upgrade. “I have just emailed Syscap to let them know that I will be sending copy invoices to them for IT equipment,” says Wright. “So yes - we will be using them again. We had a long standing relationship with another finance company for our IT, but next time we’ll be going with Syscap.”