Start Up Business Funding UK How many new companies start up in the UK? If you are starting up your own business, then you are not alone. In 2016, 440,000 incorporated companies were set up and upwards to another 200,000 soles traders/partnerships. After the US, the UK is one of the most entrepreneurial counties in […]
Computer Leasing Small Business UK Here at WestWon, we are experts in providing small businesses with leasing options on all IT equipment including computers. We have just recently gone through the process of upgrading a number of computers. It was a project that we thought was going to be really simple and cheap. However… We started off […]
VAT and Corporation Tax funding VAT and Corporation Tax funding for companies is nothing new. As a multi-million-pound business in the UK, there are thousands of solicitors, accountants and architects already using this service. However, this “funding” product has not found its way into the mainstream for SMEs that make up the heart of British […]
Perhaps like many businesses, from new start ups and SMEs to larger companies, you have come round to the idea that there must be a better way to secure funding for your business plans than relying on bank lending. Despite recent initiatives, securing finance this way still remains a tricky and long-winded process, whereas equipment leasing can be very quick to arrange and avoids the need for upfront capital outlay.
What Is Equipment Leasing?
Leasing enables you to pay for the equipment you need over a fixed period of time – typically two to five years through a series of contractual, tax deductible payments. Put simply, the leasing company (the lessor) buys and owns the asset. The customer (or lessee) then hires use of the asset, paying rental over a fixed period. At the end of the contract, the customer usually has a choice of extending the lease, buying the asset or simply returning it.
Finding Out More About Leasing
Clearly, if you have not undertaken a lease finance agreement previously, you will wish to research the topic thoroughly. That’s where the Financing Your Business Plans: WestWon Guide to Leasing comes in: it has been written to help businesses like your get up to speed with leasing terminology and to provide a concise overview of leasing. It is available to download from the website now.
This essential guide contains the information that you need to know about the benefits of leasing, the process, the options available, the things to consider and questions to ask when choosing a leasing company. After all, selecting the right company to work with is vital. As with entering into any new contract, when opting to lease equipment it is important to choose a reputable leasing partner.
For more tailored information on your business leasing options, please call WestWon on Tel: 01494 611 456
For an outline cost comparison of Leasing versus Buying business equipment. please take a look at our Equipment lease calculator.
According to new research by the Asset Based Finance Association (ABFA), over the past year small businesses must wait 23 days longer on average for payment compared to larger companies. The figures show that companies with a turnover of less than £1 million have waited an average of 71 days to receive payment, while those with a turnover of more than £500 million were paid in an average of 48 days.
Two in five small firms cite ‘invoice lost or not received’ as the excuse they were given for late payment. And worryingly, one in three is being forced to write off bad debts every year.
This is despite the Government putting pressure on big firms to sign up to the Prompt Payment Code (PPC): in fact, the current wait of 71 days for small businesses is a week longer than in 2006.
The PPC was set up in 2008 to improve small firm’s stability by helping them recover the billions of pounds owed to them in late payments more quickly. It is a voluntary register of almost 1,700 UK companies that have committed to pay invoices in accordance with contracts. But there are no sanctions for breaching the code.
ABFA Chief Executive Jeff Longhurst said, “These figures highlight that the relationship between some big businesses and smaller companies has become even more unbalanced since the credit crunch. It is alarming to see how much longer small and medium sized firms are waiting to receive payment compared with just a few years ago.”
Phil Orford, Chief Executive of the Forum of Private Business said, “Late payment continues to escalate in size and impact on small businesses. With companies facing sizeable cost increases over auto-enrolment of staff into pensions, we need to make sure cash flow is as good as possible.
WestWon CEO Jeremy Hall commented, “On-going issues with late payments and the knock on effect on cash flow is putting some small businesses in financial difficulties and it certainly makes it more difficult to make the investments they need in the recovery economy.
“At the same time we have seen a growth in the number of small businesses seeing equipment leasing as a vital financial tool in their kitbag. Asset-based finance enables them to spread the cost of essential capital investments over time, rather than having to tie up large sums of capital upfront – and given the current climate, they may well need the flexibility to deploy available funds elsewhere.”
Research from bank transfer service BACs revealed in July 14 that late payment debt is now £40 billion, up from £30 billion last summer. The forthcoming Small Business enterprise and Employment Bill will legislate for greater transparency of payment practices, with large companies required to publish their practices and how they perform against them. But whether this will be sufficient to tackle what is a huge issue for the recovery and small business investment remains to be seen.
Asset-based finance is an ever more attractive way for SMEs to acquire the machinery and equipment they need to run their businesses and invest in up-to-date IT technology to keep their infrastructure working efficiently. Leasing is also available to cover the cost of office refits, fit outs and refurbishments, which form an essential part of most companies’ business plans.
Leasing allows companies to:
- Preserve their cash reserves and existing lines of credit
- Align costs with income over time rather than making a large upfront payment
- Avoid technology obsolescence and the problem of disposing of old equipment.
These leasing benefits are particularly important for SMEs and Start Up businesses too as they enables them to manage the acquisition of equipment and related services as a predictable monthly or quarterly expense rather than a capital cost, offering clear advantages in terms and tax and budgeting. After all, no business pays three years’ salary for its staff in advance, so why pay for the equipment they use upfront rather than over its useful life.
Whether for new business start-up or an established SME trying to stay competitive, leasing can generally be arranged in a relatively short timescale subject to status, allowing businesses to acquire the equipment they need when they need it.
SMEs looking at their finance options can obtain an instant leasing quote online using the WestWon lease calculator to help with budget planning. You can also email us with any queries at firstname.lastname@example.org or call on Tel: 01494 611 456. We are here to help you grow your business.
WestWon also provides a series of Leasing Fact Sheets for businesses wishing to find out more about leasing for their particular sector – for example, public sector leasing, catering industry leasing and medical and scientific industry leasing as well as general topics such as ‘Leasing Questions Answered’. You can also download the free guide to leasing – Financing Your Business Plans.
For companies in 2014 – and particularly for SMES – cash flow remains key to running a viable business. So when it comes to investing in new business assets, for example manufacturing equipment, kitchen and catering equipment, office furniture and fit outs and refurbishments, IT infrastructure and computer hardware and software, you name it…, there is always a trade-off to be made.
Should you tie up existing capital and lines of credit to grow your business, or do you wait for better times, but risk losing competitive edge and profits? Or do you look at other options such as leasing…
Why Is Leasing Popular With SMES?
Leasing is a popular solution for SMEs looking to acquire fixed assets such as machinery and equipment.
There are several types of lease agreement, which allow companies to acquire the assets they need to run their businesses without upfront capital outlay. What leasing does is enable you to pay for the equipment you need over a fixed period of time – typically two to five years – through a series of contractual, tax deductible payments.
Under a commercial agreement, the leasing company (the lessor) buys and owns the asset. The customer (or lessee) then hires use of the asset, paying rental over a fixed period. At the end of the contract, the customer usually has a choice of extending the lease, buying the asset or simply returning it.
Whether for specialist machinery, recycling equipment, photocopiers or any sector-specific investment, leasing offers the benefit of allowing you to spread the payment cost over the useful life of the asset.
5 Additional Benefits of Leasing v Buying Business Equipment
- You can update your equipment more easily in future. Technology changes rapidly and avoiding obsolescence is key to staying ahead. With leasing you can enhance or upgrade your equipment as the need arises.
- Lease finance agreements can be tailored to suit your particular business requirements and include whatever combination of business equipment and related services you require under one lease agreement for easier budgeting and administration.
- Lease agreements should be transparent so you can see exactly how much interest you are paying. They don’t have to be secured against private property, and agreements cannot be cancelled by the lender unless the company leasing the item falls behind on payments.
- Tailored agreements can be over an agreed period, usually 2 to 5 years, and repayments can be made monthly, quarterly or annually by direct debit or invoice, whichever is most convenient. Lease payments can even be tailored to match your seasonal cash flow – a bonus for many small businesses.
- Regular, monthly payments can qualify as a trading expense and are therefore tax deductible, making the acquisition of essential assets more cost-effective.
Is It Better to Lease Versus Buy New Equipment and Machinery?
Clearly every business should carefully assess their options in this respect and also the types of equipment leases available as well as the best leasing deals around as these can vary.
However in most cases there is a strong argument for making the lease versus purchase comparison before committing funds either way. You can find out a lot more about the mechanics of leasing by downloading Financing Your Business Plans – the free WestWon guide to leasing.
If you know what equipment you require and how much it costs, you can also get an instant leasing quote online by using the WestWon equipment lease cost calculator. And, of course, you can always call our leasing helpline on Tel: 01494 611 456 and we’ll be happy to answer any queries you may have.
What can you lease for business? Did you know that organisations both large and small – well-established and even new start SMEs too – can lease almost any type of business equipment, hardware, software, office furniture and fit outs, not to mention moving premises and machinery? In fact, if you can name it, you can probably find a food lease option for it too … yes, including the staff room kitchen sink! You simply chose the equipment you need to grow your business and the leasing company – like WestWon leasing – provides the asset funding.
5 Key benefits of leasing for business
- Lease payments can be set against profit, thereby potentially reducing tax bills.
- Flexibility and cash flow boost: you can obtain the business equipment and technology you need without tying up available cash and lines of credit.
- Your business can also get an instant Return on Investment as once you make a set initial payment, you can acquire and start using the asset immediately, while spreading payments over the useful life of the equipment.
- Flexible repayments: lease payments can be tailored to match seasonal cash flow. You can also choose a fixed interest rate, which protects against interest rate rises and enables you to plan your budget effectively.
- Avoidance of equipment obsolescence and easier upgrades in the future: increasingly vital as more and more businesses are becoming technology-driven.
Which Business Sectors Use Lease Finance?
Most if not all business sectors use asset-based finance as part of their financial planning. We regularly arrange lease finance agreements for organisations requiring:
- IT Equipment Leasing
- Office Furniture and Refit Lease Finance
- Engineering Equipment Lease Finance
- Scientific & Medical Equipment Lease Finance
- Processing and Packaging Equipment Lease Finance
- Waste & Recycling Equipment Lease Finance
- Catering Equipment Lease Finance
- Leisure Equipment Lease Finance
- Other Business Equipment and Machinery Leasing
WestWon is a leading UK leasing company completely independent of any supplier or manufacturer, you can choose any combination of equipment and technology you require for your lease agreement. WestWon is also happy to help recommend suppliers if you don’t have one in mind.
For more information about how leasing versus buying can work hard for your business, contact WestWon on Tel: 01494 611 456.