What Every Business Needs to Know About Asset Finance
Buying equipment outright can be very costly and consume a great deal of capital. For this reason, many companies choose to make use of business asset finance to fund these types of purchases. When you choose to use this option, you pay a monthly amount that easily fits into your budget and you don't have to worry about asset depreciation. You'll find one major benefit of going this route is you can upgrade your equipment when needed to keep up with changing technology. You no longer need to worry about selling the old equipment to help fund the new with the help of asset financing.
Many companies wonder what they can purchase when they choose this option and are surprised to learn the funds may be used for any fixed asset. If you need equipment finance uk, a company will provide this, along with financing for machinery, computers, furniture, vehicles and more. The rule of thumb to use here is the item must be tangible and will not be converted into cash. This prevents you from buying stock and construction financing other items of that type, but most purchases may be funded this way.
You will find that there are tax benefits associated with asset financing. Each finance payment is considered a business expense, therefore you may write it off on your taxes and reduce your overall tax burden. When you purchase tangible assets outright, the only expenses you can mark off are loan interest and depreciation. Often, these two combined are less than the lease payments you will be making to the asset finance provider. VAT is payable on the assets you choose to rent, rather than the purchase price, allowing you to see an immediate increase in available capital and you can reclaim this VAT. Be aware that special rules will apply when dealing with vehicles.
If you decide this option is right for you, you must begin comparing asset finance providers. Numerous companies now offer this service, yet you need to find one that will sit down with you and provide all options. The goal of the provider should be to find the solution which best meets your unique needs, as your business is unlike any other. Contact a minimum of three companies and look not only at their offerings, but their customer service and support, lending options and more. Doing so makes the process easier for you in the long run, as you may find you wish to use this option repeatedly because it makes a great deal of financial sense.