Asset Finance Information

Paying cash for an asset can be a significant drain on your working capital. Leasing the asset, however, allows you to access the asset without making any payment. It is a preferred option over direct buying as it not only helps to conserve working capital but also helps in smooth functioning of the business by providing a managerial leverage. Now a days, asset financing is available on almost all types of assets ranging from computers, telephone systems, photocopiers, office furniture, plant and machinery to bigger assets like vehicles, such as ships, aircraft, lorries, vans, company cars, forklift trucks and buses.

Benefits of Asset Finance:

1. Conserve Working Capital: Asset financing prevents blocking of working capital in tangible assets and thus helps to maintain better cash flow.
2. No up-front Cost: Asset finance does not involve any kind of upfront cost and spreads the cost of the assets over monthly or quarterly installments which are easier to pay.
3. Does not affect your credit worthiness: Asset finance is not debt; therefore, it keeps your borrowing options open. Assets financing have no influence on your credit ratings as it is classified as an expense and is not recorded on the balance sheet.
4. Provides financial leverage: Asset financing also includes installation, maintenance and refurbishing cost of the asset.
5. Fixed rate of interest: The interest rate on asset financing is fixed unlike the variable loan rate and is not affected by the floating interest in the market value or economic inflation or deflation.
6. Improve ROI: Asset financing enhance the rate of return that you achieve from the asset as the repayments are made on an installment basis.
7. No risk of obsolescence: Asset financing allows you to use latest equipment and offers flexibility of upgrading. It eliminates the risk of extinction or disposal of the equipment as you do not have the ownership.
8. Tax Benefit: Asset financing saves the VAT up front and also offers tax remittance. Depending upon the agreement and funding option, you can also claim capital allowance and acquire the equipment at minimum cash outlay.