Asset finance or leasing enables the purchase of any equipment related to your business, from vehicles to office equipment. Leasing gives you all the benefits of ownership but without the worry of the asset depreciating in value. Payments can also be set against taxable profits in the UK, which makes this a very tax efficient way to equip businesses.
Factoring & invoice discounting can also release up to 85% against unpaid sales invoices within 24 hours. The remaining balance is paid when your customers settle their outstanding invoices. Asset based lending including invoice discounting is usually available to businesses with an annual credit turnover of £250K or more.
So what are the main advantages of asset finance and leasing?
Save working capital – When businesses buy equipment outright, the capital invested becomes tied up in a depreciating asset, stopping them from investing in other projects. Leasing, however, allows you to save resources for other purposes, such as new business opportunities, unexpected needs, business development or marketing.
Easier budgeting – Payments are fixed for the full agreement period and are not affected by inflation or changes in interest rates. Therefore, businesses can accurately plan for their finance payments in advance, helping to simplify the budgeting process.
Maintain existing credit lines – Existing credit lines arranged with a bank or other funders remain intact. As a result, businesses have the extra flexibility to still use their bank’s facilities if required in the future.
No deposit – A deposit need not be a pre-requisite of the finance arrangement. Businesses simply make regular payments throughout the life of the agreement.
Tax efficient – With many forms of finance agreements, payments may be offset against taxable profits, reducing the net cost overall.
Upgrade opportunities – Finance allows businesses to keep up-to-date with advancing technology and to respond to changing needs. Businesses can add to or upgrade their original installation to accommodate unforeseen changes in their requirements.
Convenience – Payments can be made by direct debit. Multiple payments can be collected on one single monthly or quarterly direct debit, saving on bank charges and administration.
Flexibility – Individual leasing agreements, including contract lengths, are tailored to meet the particular needs of each business, ensuring that the payments match the company’s existing and planned budget.