Asset rentals allow businesses to utilise products and equipment that they may not be able to afford independently. This might be because of a limited time in business or poor credit due to too many credit enquiries. This form of business agreement is becoming increasingly popular for its myriad of benefits; including its ability to improve cash flow and offer access to newer equipment or better technology.
Equipment and commercial machinery can be one of the most significant, recurring expenses in running a business. When products inevitably become worn or obsolete, they can be incredibly expensive to replace.
How Does It Work?
We offer an asset rental service whereby you are able to source the equipment you need and we can purchase it on your behalf and rent it to our Client for a fixed term. This is an excellent strategy for businesses experiencing cash flow issues or an inability to obtain finance, as they are still able to access the products they need to remain not only operational, but competitive. Once the rental agreement has reached the end of its term, you have the option of purchasing the asset.
Improved Cash Flow
One of the most significant benefits of asset rentals is that they encourage business growth. With fixed repayments, equipment upgrades are no longer a large, unexpected (and usually very inconveniently timed) upfront cost, but a planned, manageable payment. This allows businesses to more accurately forecast and budget their finances; in turn, improving cash flow. In addition to this, with a clearer understanding of their budget, businesses can use the now-available funds to improve and invest in other areas of the business; stimulating growth.
No Need For A Loan
By obtaining equipment on a rental agreement, businesses avoid the burden of trying to obtain finance. With no need for a loan, businesses also avoid having to list other assets as additional loan collateral; making asset rentals a very low-risk method of accessing products. It is also “off Balance Sheet: as it’s not debt like a “loan” would be, the liability for rental payments is a future liability not a current one.
Access To Better Technology
By renting, assets that would have been too expensive to purchase outright suddenly become attainable. With the opportunity to access superior products, businesses can stay up-to-date and avoid obsolete equipment or technology.
Another popular appeal of assent rentals is that they are usually tax deductible. For assets that are used to generate taxable income for the business, the rental payments may be partly or fully tax deductible.
How To Get Started
To learn more or get started with asset rentals, contact our friendly team at Nova Cash Flow Finance here today.
- NI Business Info. ‘Decide Whether To Lease Or Buy Assets’, nibusinessinfo.co.uk, Online, [No Date], https://www.nibusinessinfo.co.uk/content/advantages-and-disadvantages-renting-business-equipment (Accessed 4 July 2022)
- McKnight, L. ‘What Are The Benefits Of Equipment Leasing?’, Legal Vision, Online, 2017, https://legalvision.com.au/what-are-the-benefits-of-equipment-leasing/ (Accessed 4 July 2022)
- Holt. ‘15 Advantages To Renting Equipment Versus Owning It’, Online, holtca.com, [No Date], https://www.holtca.com/company/news/renting-equipment-versus-owning (Accessed 4 July 2022)