Businesses of any size experience cash flow issues daily. From wages, capital items and tax there is always something that needs to be paid.
By leasing and financing high costs assets like cars and equipment, you can:
– Free up cash to invest in business expansion/or day to day operations
– Have a fixed repayment plan on the asset
– Maximise company expense and tax claims
– Spread the cost over many years
– Utilise finance facilities to allow for greater capital acquisition
– Keep your vehicles and assets up to date
Interest rates on finance are currently ranging from 4%-10% (depending on term and asset type/cost) so, in addition to the above points, what rate of return could you generate in your business by investing cash back into it?
If it is greater than the interest rate payable by financing then internal investment could be a better option for your business.
As always, speak with your accountant or business adviser for more information on what is right for your business.