To put this into a wider context, we have just published some research that examines efficiency of business investment - and we found that hundreds of millions of pounds are lying ‘frozen' in private sector businesses in the UK because they persist in purchasing their business equipment outright rather than financing it. This may sound like a niche area of economics but actually this is about the day-to-day running of each and every firm - buying essential business equipment, which could range from new computers, new enterprise software or mobile technology for the field force; perhaps a sophisticated vehicle tracking tool that improves the efficiency of your vending operation; or indeed vehicles themselves.

Whatever the business asset, the ingrained mentality that perpetuates the myth that ownership equals financial stability, seriously jeopardizes a company's ability to weather the economic storm.

Buying outright has a needlessly detrimental effect on cash-flow, particularly when it is well-recognised that technology replacement cycles are ever shortening and businesses are less and less able to have a growing proportion of their annual capital budgets tied-up in equipment and administrative IT.

At the same time, customer pressure for improved service levels (without an increase in costs) demands that companies have access to the latest technology to provide improved service level agreements without becoming unprofitable. So increasingly, firms are coming to the view that any perceived advantages of owning business equipment and technology outright, is far outweighed by the disadvantage of having working capital tied-up in this way.

So - back to our new research. The report, entitled ‘Putting Capital to Work', shows that in the UK, £37.5 billion lay ‘frozen' in 2007 because of outright purchasing by private sector businesses, rather than assets being acquired using modern financing techniques. Putting that another way, this ‘frozen' figure amounts to some two per cent of GDP. That underlines the extent to which valuable working capital is being locked up when it could be used for investment in growth strategies. On an international level, the UK actually shows a relatively lower level of capital that is ‘frozen' in this way, mainly because of a comparatively high usage of asset finance, in the form of leasing or rental arrangements.

 However, the reality is that only 30 per cent of business equipment is currently acquired using asset finance. These financing techniques are particularly attractive in the current climate, as the financing package can be secured against the equipment asset, rather than wholly depending on the obligor organisation's credit status.

In my view, the vending industry must pay more attention to this concept of ‘frozen capital' - in other words, there is an urgent need to explore operators' ability to utilise alternative financing techniques in order to keep their firms competitive during the slow economic period. Techniques that are currently not used to maximum capacity, but which could make a significant contribution of better working capital and cash flow management in the credit crunch, are surely worth a second glance. As a final point, I always remember a ‘gem of wisdom' that I was told early on in my career: Companies who treat cash as a scarce resource even when times are good, are those who prosper when times are bad.

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