When is the right time to make a large business purchase?

Making a large business purchase

Startups, SMEs and businesses of any size thinking about making large capital purchases for their company are recommended to plan purchases in advance, if at all possible. Of course, there are times when large purchases are unavoidable, for example, if a business vehicle needs replacing or the company IT infrastructure is beyond repair. On the whole, though, any capital expenditure needs to be timed to take advantage of any tax breaks that could be available. In this article we look at when is the right time for making a large business purchase?

Planning business expenditure

Your business expenditure planning really falls under the auspices of the accountant or finance department. Capital budgeting helps identify potential returns from any investment and should ensure any major purchase provides a payoff to the business.

Keep cash flow healthy

The health of your business’ cash flow is another important factor to consider prior to making any major buying decisions. One important consideration is that making any major purchase just before your financial year end helps cut profit levels down and can be a good way to utilise business profits over the longer term. But, certainly, if you plan to invest in machinery or larger items for your business you may want to consider the benefits of leasing or equipment finance alongside any deals to buy outright.

Buy at the right time

Buying major products at the right time can also impact upon the price paid. Many suppliers offer seasonal sales and end of quarter or financial year sales in order to clear excess inventory. So, it’s important to shop around as much as possible prior to making any decision to buy outright.

Capital allowances

It’s important to look very carefully at all the tax implications when buying large items of machinery, equipment or vehicles for your business. Capital allowances mean you can claim a percentage of your upfront costs back from the outset and in following years. However, HMRC do change the rules on capital allowances on a regular basis, so it’s a good idea to check the current situation with your accountant before making any purchase.

Assets need to be used

And, finally, any major purchase of equipment or machinery needs to be justified via business growth or the likelihood of regular, continued use. There’s very little benefit in buying equipment or machinery that sits idle for a large proportion of the working day.

Making a large business purchase – where to find out more

If you need to make a large business purchase, take a look at our information on Asset Finance.

For more information about the services we provide, please contact us.

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A quick guide through secured and unsecured loans

Guide to secured and unsecured loans

One of the primary differences between types of business loans is whether they are secured or unsecured loans. A secured loan is taken out against something you own that’s of appropriate value. Depending on the size of the loan this could be anything from a watch, to a vehicle, to the business premises itself. In the event of failure to pay the loan, the asset will be sold to recover the value of the debt. With an unsecured loan, you’re not borrowing against anything. Generally, finance vendors will instead look at your credit rating and financial history to determine if they can trust you to pay back the loan, and on what terms. In this article we look at the advantages and disadvantages of secured and unsecured loans.

What’s good about both

A major benefit of a secured loan is that they are generally relatively easy to qualify for since it’s your collateral which will be relied on in the event of failure to pay. They also generally attract lower interest rates which make them more manageable for the majority of SMEs.

The attraction of an unsecured loan, however, is that in the event of failure to pay, your personal property is not going to be sold off to cover the debt. An unsecured loan may offer less perceived pressure and is generally the more favoured method for small to medium sized loans.

What you need to think about

A secured loan, by its very nature, means that if you default on the payments you’re liable to lose a valuable piece of property to offset the debt you owe, so it’s important to plan ahead. A secured loan can also take longer to establish, due to the procedure involving more formalities, such as asset valuation.

With an unsecured loan, however, you have to remember the vendor has nothing to secure the loan against, so it’s potentially riskier for them. This often means that interest rates are higher, and due to the fact unsecured loans are generally over a shorter period of time the monthly repayments themselves can be higher too. However, the nature of this type of loan means it can be arranged faster and with more flexibility.

Think carefully about your business financial situation when deciding between a secured or unsecured loan.

Secured and unsecured loans – where to find out more

If you are needing finance to fund your start-up or expansion of your business, please visit our Alternative Finance page to find out more about the services we offer.

For more information about the services we provide, please contact us.

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Cash flow mistakes small business owners make

Cash flow mistakes made by small business


Regardless of your business model, your profitability or the number of investors you have interested in your business and the number of potential clients, your business cannot survive if you can’t manage your cash flow. So even if you are a great manager, entrepreneur or salesperson, you need to ensure that you can effectively manage your cash flow in order to ensure that your business runs smoothly. As such, our experts have suggested the most common cash flow mistakes that small businesses make in order to ensure that you don’t repeat them.

1. Overestimating future revenue

It’s true that optimism is a trait of entrepreneurs, and while a positive outlook is good for the most part, it can be dangerous when estimating future revenue and sales volume. Ensure that you are using official quantitative forecasting models rather than your own formulae to forecast future sales, so that your figures will be more accurate and precise.

2. Spending on impulse

While it is often the case that it takes initial investment for future growth, it is important to budget for all of your purchases. Buying or investing on impulse can affect your cash flow, and may lead to extreme overspending if you engage in impulse buying all the time. Instead, create a budget and stick to it all the time.

3. Keep some reserve money

When running a business there are a number of things that could go wrong at any time. Whether there is a burst pipe in your office, or your vehicle breaks down, you should always have some money set in reserve for emergencies such as these to minimise your downtime.

4. Consider finance lease

Instead of buying equipment outright, in many cases, a better solution can be to finance lease the equipment. Not only does this allow you to more effectively manage your cash flow by not having a significant outlay, it also means that you won’t be subject to capital depreciation and will get a better deal in terms of tax.

Cash flow mistakes made by small business owners – where to find out more

At Tower Leasing, we assist companies looking to secure assets and equipment through a finance lease, and we help industries across the board with alternative funding and leasing solutions. By working closely with our clients, we offer bespoke and tailored solutions, helping all clients maximise their cash flow. For more information about the services we provide, please contact us.

Or click here to read about the alternative sources of finance we can help you with.

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Alternative funding sources for startups

Alternative funding sources for start-ups

The poor state of the global economy has made it difficult for many people to secure employment. Some people have decided to try out entrepreneurship with the aim of achieving financial freedom. However, they face several challenges, such as lack of capital. Below are some alternative funding sources for startups you can use to build your business.


Entrepreneurs can get business grants from local, international, and national sources. Before applying for a grant, however, you need to check your business’ eligibility. The majority of grants offered in the United Kingdom are set aside for environmental projects, employment and training, as well as research and development.

Peer-to-peer lending (P2P)

This is an online process that allows investors to interact with borrowers. There are 2 types of P2P:

  • P2P business lending – The loan is offered to companies.
  • P2P consumer lending, where money is offered to individuals.

Venture debt

If you’re operating a fast growing business, you may want to consider venture debt. This financing option involves leveraging company funds to raise capital. It’s often used by businesses that want to achieve certain goals without diluting their equity share.

Pension-led funding

Some startups use pensions to raise capital. Lenders offering pension-lending don’t require any personal guarantee from the borrower. They offer protection for assets held within the borrower’s pension scheme.

Venture capital finance

Companies that need huge amounts of equity are often advised to consider venture capital finance as an alternative. To use this funding option, you’ll have to offer equity to your investors. In most cases, venture capital investments occur after the first funding round.

Friends and Family

You can borrow money from those close to you. Be sure to hold your end of the bargain to avoid straining your personal relationships with other people. Only borrow an amount you can repay on time.

Invoice discounting and factoring

This is a form of short-term borrowing. It’s often used to improve the cash flow position and working capital of a company. Invoice discounting enables borrowers to use their sales invoices to secure loans. When using the business funding option, you’ll be allowed to borrow amounts equal to a percentage of your sales ledgers. You can also use unpaid sales invoices as collateral.

Alternative funding sources for startups – where to find out more

You can read here about the alternative funding sources we can offer.

Or please get in touch if you’d like to discuss different funding options for your business.

5 ways to make your startup stand out

5 ways to make your startup stand out

With so many businesses starting up every day, all competing for attention from potential prospects and customers, going the extra mile to make your startup stand out can really make a difference. With this in mind, we take a look at the following 5 ways to make your startup stand out from your competition.

1. Prioritise customer service

Whether you’re offering a product or a service, always treat your customers and clients like royalty. One of the biggest gripes customers have is poor service when things go wrong. Also, it’s much cheaper and easier to keep a satisfied customer, than to spend money on marketing to obtain a new one. Even better, a highly satisfied customer will spread the word and potentially contribute to your business growth.

2. Offer a top-notch guarantee

When you are new, your business hasn’t yet built up enough trust to persuade people to seamlessly and quickly sign up for your service or product. Providing the assurance of a guarantee can help solve this obstacle. For example, a next day or 100% guarantee essentially shows that you believe 100% in your offering. So buyers don’t have to worry about going through so-called buyer’s remorse.

3. Honesty

Many new startups are so scared of failure and negative feedback that they try to cover up their shortcomings with half-truths and dishonesty. The problem is that when the truth comes out, the negative feedback may be much worse. People have become so disillusioned and cynical about business that being honest and up-front may make you stand out in a good way.

4. Start a blog

Having a blog or articles on your platform means you are giving away valuable or fun content for free. This content makes your potential and current customers feel closer and more connected to your business and brand – making them more likely to purchase or re-purchase from you in the future.

5. Tell a compelling and unique story

The love of a good story is common to most people. That’s why you see so many television commercials use them. A great way for people to connect with and trust your company is to tell them how your business came into being. Tell it so that your customers have empathy with your business. People buy from others that are just like them, so your startup will attract your ideal customers.

Of course, the most important thing is to make sure that your product or offering is already of a high standard and provide value that people actually need. Once you have that sorted, the five suggestions above will make sure that the right people actually see and buy it!

5 ways to make your startup stand out – where to find out more

We’ve supported the investment and growth of over 60,000 SMEs.  If you need help obtaining funding for your start-up – whether that’s funding for expansion, to buy much-needed equipment or to invest in computer software and hardware, we’re here to help. Please get in touch if you’d like to discuss funding for your business.

Please click through to our Business Finance page to find out more about finance for your start-ups.




Three ways leasing equipment could give your SME a competitive advantage

Four ways leasing equipment could give your SME a competitive advantage

One of the key drivers behind you and your business’ ability to grow is your access to the best equipment: whether that’s the latest computer technology, software or any other capital machinery. So, being able to get a hold of this quickly, cost-effectively and easily can be a vital factor in your ability to perform. Equipment leasing brings with it a whole range of benefits, from enormous tax breaks for SMEs to boosting cashflow. Leasing equipment could give your SME a competitive advantage, so we take a look at some of the ways those stack up to help give you the edge in a crowded, competitive marketplace:

1. Flexibility

To compete, SMEs have to be fast moving, dynamic and ready to adapt at all times. Leasing gives you a powerful way of dealing with the natural ebb and flow of the business cycle. Cost-effective equipment hire allows you to quickly scale up for rapid growth and expansion, and gives you the choice: do you spread the cost with monthly payments, or pay up front? The decision is in your hands – and that’s a key differentiating factor between you and your competitors in how you manage your business.

2. Tax benefits

It’s a good idea for any business to maximise the efficiency of how they’re taxed. A massive advantage of leasing is that it appears as a ‘rental payment’ in your company accounts, which means it can be offset in its entirety against pre-tax profits – a much more attractive prospect than cash purchases. That ultimately means a boost to your cash-flow, which you can then use to direct towards other, more critical areas of the business.

3. Avoid enormous depreciation costs

Nobody wants to be stuck with old or obsolete equipment: it is often more of a hindrance than a help, limiting your workforce’s ability to get the job done and potentially missing out on new business. Leasing allows you to stay on the cutting edge and leverage the very latest technology while limiting your exposure to potentially skyrocketing depreciation costs. You won’t be stuck with an expensive load of equipment that is suddenly rendered obsolete by the latest innovation. Particularly for an SME, smart asset finance can be the key to surviving and thriving in the modern marketplace.

Leasing equipment could give your SME a competitive advantage – where to find out more

If you need help securing lease financing for your SME, please get in touch with us. We enable companies across the UK to acquire much needed capital equipment through leasing and can offer financing for many different requirements from asset finance to business expansion and invoice financing.

Find out about the different types of finance we can provide on our Alternative Finance page.

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