Why asset finance can be more cost effective than outright purchase

Why asset finance can be more cost effective than outright purchase

Business Finance, News

Asset finance refers to purchasing equipment for your business and paying for this over a fixed amount of time in smaller instalments, rather than paying for it upfront. Whether this comes in the form of lease rental or hire purchase, they both often end up being more cost-effective. Here are our top reasons why asset finance can be more cost-effective than outright purchase.

You get the equipment now

Opting for asset finance rather than an outright purchase means that you are more likely to be able to get the equipment that you need straight away instead of waiting for when the budget allows for it. This means that you can start using the equipment sooner, which may boost productivity within your business and therefore profits. This makes the money-making process much quicker and more effective than waiting to earn enough money in order to buy equipment outright.

You can better manage your cash flow

Asset finance means that you are able to spread the cost of equipment into more manageable, smaller amounts. This means that your cash flow is higher on a monthly basis, with more money kept in the bank. This money can then gain interest or be pumped into other areas of the business that need investment, rather than being lost in one area straight away. In terms of using asset finance for hire purchases, another benefit to your cash flow is that you are not forking out for a piece of equipment that you may only use once – instead, you only pay for it when you need it.

Improved tax efficiency

Asset finance is highly tax-efficient because payments on certain types of asset finance are tax-deductible business expenses. When using asset finance that is spread out quarterly, for example, you are likely to have higher capital allowances to claim, which can be deducted from your yearly profit and are therefore not taxed. This means that through asset finance, you will often see greater amounts of tax relief and be better off in the long term. Click here to see an example of how this works.

Asset finance – where to find out more

Tower offers a full range of finance solutions – products and services aimed at business development and growth. Regardless of how much capital you need or how big you are as a company we can normally help. Our transaction size starts from as a little as £1,000.00 and we have arranged funding facilities for brand new starts ups with little to no trading history to those turning over millions of pounds.

To find out more, read about our alternative finance and asset finance solutions. Or get in touch to discuss how we may be able to help you with asset finance.

Image by: Goumbik via Pixabay

Why your customers are looking for finance options right now

Why your customers are looking for finance options right now

As more customers cut back on spending due to the harsh economic situation, your business will suffer when they postpone or cancel their plans to buy from you. Whether you’re a B2B or B2C company, you need to find ways to encourage more purchases from your customers....

read more
Why leasing your equipment is so cost effective

Why leasing your equipment is so cost effective

If you are looking for a way to save a little extra money for your business and company, or you want to make sure you always have access to the best technology or items that money can buy, a great solution is to do this by leasing your equipment. Using leasing to...

read more