Comparatively few companies have sufficient liquid capital to enable them to go out and purchase outright a major item of capital equipment. Even if they did, it might not be the most cost-efficient route to follow.
More commonly, they will seek some form of asset finance to assist.
You may hear the term asset finance used to describe two very different things:
Different asset finance providers may have different definitions of acceptable purposes. Broadly speaking, this type of finance can be used to purchase anything such as commercial vehicles, plant and machinery, warehousing equipment and so on.
Commonly, companies offering assistance with asset finance will be looking to see if the thing you are considering purchasing meets some of the following criteria:
If you speak to an experienced provider of asset finance, they will be able to outline their own definitions and there is likely to be one that is suitable for your particular circumstances.
There are numerous asset finance solutions and some may be more suitable for your specific circumstances than others.
You may find that they will typically fall into one of the following generic categories:
Although recent changes in legislation have to some extent simplified the position, asset finance remains a complicated area from the point of view of taxation and standard accounting. The solutions you choose may affect, for example, things such as your gearing and assets versus liabilities picture.
It’s highly advisable to speak with a specialist provider of such finance to obtain advice and you should ensure that your own accountant is fully engaged in your selection of an option.