How can asset finance benefit my business in terms of cash flow and growth?

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How can asset finance benefit my business in terms of cash flow and growth?

Asset finance can provide several benefits to businesses regarding cash flow and growth. Some of the key advantages of asset finance include:

  • Preserves cash flow
    Asset finance allows businesses to acquire essential assets without making a significant upfront payment. Instead, the cost of the asset is spread out over regular payments, which helps preserve cash flow for other business needs, such as working capital, expansion, or investment in other growth opportunities.
  • Provides flexibility and scalability
    Asset finance offers flexibility regarding the type of assets that can be financed and the financing terms, including repayment schedules and lease or purchase options. This enables businesses to customise asset acquisition plans based on needs, growth strategies, and budgetary considerations.
  • Accelerates business growth
    Asset finance can facilitate business growth by providing access to necessary assets to drive operational efficiencies, improve productivity, and expand business capabilities. For instance, acquiring new equipment or machinery through asset finance can enable businesses to increase production capacity, offer new products or services, enter new markets, or enhance customer service.
  • Enables asset upgrades and technology adoption
    Asset finance can enable businesses to upgrade their existing assets or adopt new technologies without incurring significant upfront costs. This can help companies stay competitive by keeping their equipment and technology up-to-date, improving operational efficiency, and staying ahead of industry trends.
  • Enhances cash flow management
    Asset finance provides predictable payment schedules, which can help businesses better manage their cash flow. This allows for better budgeting, financial planning, and forecasting, as companies can anticipate and plan for regular payments rather than facing enormous upfront costs or unexpected expenses associated with outright asset purchases.
  • Offers potential tax benefits
    Depending on the jurisdiction and specific financing structure, asset finance arrangements may offer potential tax benefits. For instance, lease payments for certain assets may be tax-deductible as a business expense, reducing taxable income and potentially lowering overall tax liabilities.
  • Mitigates risk and obsolescence
    Asset finance allows businesses to transfer the risk of asset ownership to the finance provider. The finance provider holds ownership of the asset until the end of the financing term. This can mitigate the risk of asset obsolescence or depreciation, as the finance provider may be responsible for disposing of or managing the asset at the end of the term.
  • Simplifies asset management
    Asset finance arrangements can include additional services such as asset maintenance, repair, and insurance, which can simplify asset management for businesses. This can help companies avoid additional administrative burdens and costs associated with asset maintenance and insurance, as the finance provider may take care of those responsibilities.
  • Provides faster access to assets
    Asset finance can provide faster access to assets than traditional asset acquisition methods, such as saving up for the total purchase amount. This can help businesses expedite their asset acquisition plans and take advantage of business opportunities requiring timely asset access.
  • Improves credit utilisation
    Asset finance does not typically require collateral beyond the financed asset. This can help businesses use their available credit lines with other lenders or financial institutions. It can also enable businesses to access additional funding or credit for different business needs while acquiring necessary assets through asset finance.

It’s important to note that the specific benefits of asset finance may vary depending on the type of assets being financed, the financing terms, the lender’s requirements, and the business’s unique circumstances. It’s always recommended to consider the potential benefits and risks associated with asset finance and seek professional advice from a financial advisor or lender to determine if it suits your business needs.

How can Sterling Commercial Finance Help?

At Sterling Commercial Finance, we’ve been helping businesses access funding for over 20 years. Contact the team today to see how we can help your business.

Discuss your financial needs with a member of our team 0115 9849800 or email
Alternatively, complete our Online Enquiry Form.