As the UK’s economy starts to fire back up again, not only are the UK’s business owners increasingly positive about the future, but four in 10 are hoping to expand in the coming 12 months. By far the biggest obstacle facing them; however, is concerns about cashflow. 

With things slowly returning to normal business owners are grappling with the issue of the impact of the cash tap being turned off or tied up in unpaid invoices. 

When this happens, the options available to business owners can appear to be stark – pull down the shutters; go to a lender and ask for advice or apply for further loans to cover costs and hope for the best. 

Or, businesses could take a step back and look to physical business assets to prove their worth in ways they may not have thought possible. 

For many years, during good times and bad, business owners have increasingly turned to asset finance to help them maintain cash flow. 

But what is asset finance? In short, it’s an alternative form of funding used by businesses to obtain the equipment they need to grow or access much-needed cash. Asset finance makes the otherwise unaffordable affordable because it gives businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase. 

Agreements can also be customised to the business’s needs, with flexibility on both the term and repayment schedule.

There are various products that come under the broad umbrella of asset finance with one of the key ones being Refinancing or capital release, as it’s also known; it’s a proven way to make assets work for businesses and release cash back into the business. 

It’s pretty straightforward and works by the finance company purchasing the asset and financing it back, with repayments calculated in line with the income the asset is expected to generate.

This offers several great benefits to a business that just needs a cash injection, whether it’s for investment in additional business critical assets or to use in other areas of the business, including unexpected bills and invoices, salaries, VAT payments, diversification – the uses are almost endless.  We can also look to take over a finance agreement with another provider and extend the term, ultimately reducing monthly payments and easing the pressure on cash flow.

Other examples of asset finance products are: 

  • Hire Purchase (HP) allows the customer to buy the equipment on credit. The finance company purchases the asset on behalf of the customer and owns the asset until the final instalment is paid, at which point the customer is given the option to buy it.
  • Finance lease: The full value of the equipment is repaid to the finance company, plus interest, over the lease period. At the end of the term, the company can choose to:
    • continue to use the asset by entering a secondary rental period
    • sell the asset and keep a portion of the income from the sale
    • return it 
  • Operating lease: Similar to a Finance Lease, an Operating Lease allows the business to rent the asset from us while they need it. The key difference between the two is that an Operating Lease is only for part of the asset’s useful life. This means payment is a reduced rental because the cost is based on the difference between the asset’s original purchase price and its residual value at the end of the agreement.

Why Finance for Industry? 

Finance for Industry is a leading specialist in finance for engineering, plastics and machinery that offers a range of bespoke finance options for your business.

We offer a local and personal service through a team of experienced finance professionals located throughout the country and supported by sales and customer service functions, based at our office in Chester. 

We pride ourselves on building strong, long-term customer relationships along with employing the latest technology to deliver a rapid and reliable service.

For more information, please visit: www.financeforindustry.co.uk