Bank of England Interest Rates decision- Should lending banks follow suit?

The Bank of England (BOE) today kept their rates at 5%. The decision had been widely expected, despite calls from business groups to cut borrowing costs.

The BOE reduces rates as a way to control the economy. I was asked the question today from a colleague what I thought about forcing the lending banks to follow suit if the BOE had reduced their rate.

It is often the case that the lending banks keep their inter-bank rate high when the BOE has reduced rates and the two are not necessarily linked, this then negates the effect of the rate cut.
The BOE based their decision on what is the best for the country as whole, whereas the lending banks have their own business issues to to consider. I believe that market forces will usually win through and this will correct itself base. Do you agree?

Energy Performance Certificates (EPCs) for commercial properties

The introduction of Energy Performance Certificates (EPCs) as part of Home Information Packs (HIPS) for residential properties has been well publicised. It is however surprising that the lack of awareness with businesses and Landlords in respect of the the impact of EPCs on commercial properties. It is vital for Businesses to understand the regulations or they will risk fines up to £5,000.

The EPCs have already partially come into force. By October this year the majority of commercial properties will require an EPC. The current timetable is as below:

6 April 2008 - EPCs required on construction for all dwellings. EPCs are required for the construction, sale or rent of buildings other than dwellings with a floor area over 10,000 m2.

1 July 2008 - EPCs required for the construction, sale or rent of buildings other than dwellings with a floor area over 2,500 m2.

1 October 2008 - EPCs required on the sale or rent of all remaining dwellings EPCs required on the construction, sale or rent of all remaining buildings other than dwellings.


4 January 2009 - First inspection of all existing air-conditioning systems over 250 kW must have occurred by this date. 4 January 2011 - First inspection of all remaining air-conditioning systems over 12 KW must have occurred by this date.

All businesses need to assess if EPCs will b required and if they need an EPC. For further information visit: http://campaigns.direct.gov.uk/epc/

International Money Payments- Personal Transfers

Businesses have often taken advantage of working closely with foreign exchange specialists when dealing with foreign exchange risk and managing their international business payments.
This approach of obtaining advise from a foreign exchange consultants and utilising their services for money transfers is well recommended for individuals as well particularly if they need to to effect larger or regular transfers.

With the number of ever increasing individuals owning an overseas property and this number predicted to increase. Individuals who are exposed to currency risk need to obtain advise from a foreign exchange payment specialist otherwise the individuals will face many hidden costs in their international dealings. In most cases using a specialist can bring in some significant savings in transferring payments as well as reduction of currency risk.

It has been predicted that over 1 million people have plans to buy overseas properties or businesses in the next few years, the the hidden costs of owning a foreign home can be significant if not managed effectively. To avoid the extra costs, many Foreign Exchange Consultancies are advising overseas buyers to consider fixing their exchange rates for up to two-years via a forward contracts. A fluctuating exchange rates would directly alter the price of a property before completion and increases the risk of purchasers spending more than they initially intended.

Unsecured Pharmacy Business Finance

Unsecured Pharmacy Business Finance

A unique bespoke service developed for independent pharmacist businesses puts the Pharmacist in control of his NHS prescription side of the pharmacist business enabling him to release immediate cash and also enabling cash release on a daily basis based on daily sales.

The cash released from the NHS prescription payment (PPA) cycle enables pharmacists to re-invest in their businesses in areas such as improved merchandising, upgrading of premises or any other purpose.

The service is easy to use. It is non-intrusive and not tied to any wholesaler or industry supplier. It is not a loan, and grows with the pharmacists as the business grows.

Unlike typical retailers, independent community pharmacists make 80% or more of their sales on credit terms due to the NHS payment cycle.
The NHS / PPA payment cycle is complex, resulting in a minimum payment delay to pharmacists of 52 days.

In addition to having to fund the complex and long payment cycle of the NHS / PPA, the amount outstanding grows each year as the overall drugs bill increases. The drugs bill has increased at an average of 9.5% a year s a result of the growth in demand for drugs due to
(1) An aging population causing more prescriptions to be written;
(2) The changing mix toward higher priced drugs;
(3) Increases in drug prices.

The NHS expects this growth to continue at 8%. The effect on pharmacists of both the initial investment they had to make to fund the NHS prescriptions and the increases in the drugs bill that results in a very significant amount of capital tied up in the NHS / PPA payment cycle. For an average independent pharmacists with annual NHS re-imbursements of £500,000 per year, this results over £71,000 caught up in the in the payment cycle.

The Pharmacy Business Finance service enables an immediate release in the capital caught up in the NHS / PPA payment cycle which is £71,000 on average. Taking this forward the Pharmacy Business Finance service releases cash on a daily basis eliminating the need for the pharmacists to fund the increasing NHS drugs bill.

Pharmacy Business Finance service purchases the pharmacist’s NHS Prescriptions which are receivable assets outright for immediate cash less a small discount, The pharmacy business finance service is not a lending institution. There is no loan facility; hence there are:

· No loan repayment obligations,
· No security requirements,
· No intrusive monitoring arrangements,
· No requirement to meet minimum purchasing obligations, as in the case of typical
wholesaler guaranteed loans,
· No prepayment restrictions or penalties, and
· No termination penalties (terminable in 30 days).

In fact, the pharmacy business finance service is better than a loan as it:

· Eliminates the need to keep on funding increases in the NHS receivables,
· Provides valuable financial information
· Converts the business to a cash business on a daily basis and thereby increasing the
pharmacists control over the business.

The duration of the cash release is either long term or short term (terminable on giving one month’s notice) depending on the requirements of the pharmacist. It may therefore be viewed as a source of permanent development capital.

While the service has universal appeal as to the pharmacist’s ability to gain control over his NHS business by converting it to a cash business on a daily basis, the value of Pharmacy Business Finance service is most helpful to pharmacists wanting funds to:

· Refit their pharmacy
· Take full advantage of shortline wholesaler opportunities
· Pay suppliers more quickly to earn settlement discounts
· Pay off expensive debts
· Releasing cash to buy a complementary business
· Developing additional clinical services
· Developing new retail initiatives
· Reduce the dependence on a single wholesaler
· Eliminate restrictions on borrowing
· Releasing oneself from personal guarantees
· Avoid lengthy and complicated commitments – the pharmacy business
finance service contract may be terminated on 30 days’ notice

For further information and to receive a visit from a Business Relationship Manager throughout the UK please email me in the first instance.