What are the benefits of equipment finance, we have been asked this often over the last 29 years. Most finance companies will simply start by listing all of the normal benefits of equipment finance that are on every website on the web.
Furthermore, they rarely explain in normal, jargon free language. We hope that we have made it very easy and clear to fully understand what are the benefits of equipment finance.
Gives you a rainy day fund.
The key benefit of equipment finance is that it will preserve your cash in your company. Every company needs what we call a rainy day” fund, to cover the unexpected bills that suddenly crop up from nowhere.
You know the sort of thing, a van engine suddenly needs replacing, money needed to purchase new materials for a new customer who will help you grow your business.
We cannot stress hard enough that cash flow is crucial to any business, and a cash rainy day fund simply gives you flexibility to cover unexpected day to day expenses. Remember the key phrase in any business, Cash is King
Avoids the bank manager.
Very few people actually enjoy speaking to your bank manger, there is always a certain air of trepidation. Will he ask for extra security to cover the loan or overdraft before he might consider. Will he ask for updated management and budget figures? The terms that banks offer loans are a major obstacle to companies looking for finance from their banks. And remember, overdrafts can be withdrawn normally on 28 days notice!!
When you ask the bank manger if you can include installation, transport, etc, you will hear the phrase that is very well known, ” computer says No”. With Oak, we say YES! If you are a new start business, well you can guess what the answer will be!
It will free your bank credit line for other uses, perhaps the need to employ extra staff, or sudden cashflow fluctuations.
Oak’s fixed term equipment finance or HP will run for the period of the agreed term, as long as you make the normal and agreed repayments every month, no 28 days hanging over your head. You can plan your future with the confidence of a fixed monthly repayment and a fixed term, and rates are still at historic lows.
Everyone’s reason is different.
If you asked companies that use finance, they will come up with many different reasons why they chose equipment finance, could be cash flow, might be a rainy day fund, they might require their cash to fund other equipment. New starts need to save their cash, established companies might say, it is the tax benefits.
It simply is up to you, but remember no one pays their staff 3 years in advance. Therefore, let the equipment work for you and generate the profit by spreading the cost, it really is a no brainer!
Include soft costs.
Equipment finance provides you the opportunity to include soft costs such as delivery charges, installation and training to be included the overall cost price. These are often separated out by the traditional funding sources like banks and overdrafts.
What equipment can I finance?
Banks are quite particular when it comes to lending, if it is painted yellow, or has a wheel at each corner, they will normally say yes. If you tell the bank it is funding for a commercial kitchen with air conditioning. Also add that ducting and installation costs are involved.
You could well hear a sharp intake of breath! Equipment finance gives you the total flexibility of choice of equipment, and what else that you want to be added onto your lease agreement.
As you are not outlaying a capital sum, but a monthly repayment, this normally helps in in acquiring perhaps better or more efficient equipment that you would have been able to afford with a cash purchase.
In fact if you look at what we have financed over the years, you can see that it can be used for almost any piece of equipment that you can think off, from plant, machinery, furniture, air conditioning shoplifting, North Sea equipment, gin stills, football pitches, renewables, even gin stills, the list is almost endless!
But if I pay cash, it is mine!
That is true, but if you really think about it, do you need to actually own the equipment. If you look around you, how much old equipment is still in storage in your company. Probably you have old computers, fax machines, obsolete machinery or other equipment that you will never use again.
Just clutter. If you really need to own equipment, finance is a very good option, and you have spread the cost.
With equipment finance options, HP, where the title fee at the end is normally around £150. With finance, often no more than one more monthly repayment, it is hardly a kings ransom! You could say, that is having your cake and eating it as well!
A thought for you, in 2017, the FLA (Finance & Leasing Association) members confirmed that over £128 billion was provided to UK businesses and customers. In anyones terms, that is a shed loan of money! They cannot all be wrong can they?
So there you have it!
In “jargon free ” language, you now know why businesses choose equipment finance, and we hope this answers your question. Oak is transparent, impartial and experienced, coupled with thousands of happy customers, millions funded. If you are looking for a small quote from a big company use our asset finance calculator !
