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There is no asset we won’t consider from tangibles to intangibles, even 100% software. The team at Clear finances a wide variety of capital equipment across all market sectors.
Equipment finance explained
Ideal for those looking to protect themselves against asset depreciation or where ownership isn’t necessary. With a lease agreement you are effectively renting the equipment for an agreed term with the option to upgrade at any point, ensuring your business always has the latest kit. Acquisitions with leasing allow you to minimise or even remove upfront fees and also spread the VAT over the length of the contract. Instalments are pre-set, allowing you to more effectively forecast outgoings. You will always get the option to continue using the equipment at the end of the term.
In a nutshell, a Higher Purchase agreement contains the option to purchase the asset at the end of the term for a pre agreed fee. Higher Purchase is a common choice for businesses looking to avoid the large upfront outlay associated with acquiring assets that have a high residual value. Breaking down the expense over time will help to
protect your cash flow while you’ve got the added comfort of knowing your repayments are contributing to your eventual ownership. At the beginning of the agreement, an initial deposit is usually paid, the amount of which can vary, for example, you might choose to pay a higher deposit in order to reduce the on-going monthly payments.
An operating lease is typically reserved for assets that are not prone to rapid depreciation and where the client has no need for ownership. To calculate the repayments on an Operating lease the funder will estimate the future value of the equipment, alternatively known as the Residual Value.
The total rentals repayable are based on the total cost less the residual value. Subsequently the repayments are lower and more attractive to the lessee. Effectively the finance provider has projected that at the end of the lease term the equipment will have a resale value higher than the residual value, therefore covering the shortfall. For this reason the operating lease term will always be shorter than the expected life cycle of the asset.
Thousands of companies every year benefit by releasing capital from their (unencumbered) assets, receiving a massive cash flow boost to grow and expand their business. Alternatively, if revenue from a recent equipment investment is slower than anticipated, re-finance is a way of releasing the cash back into your business bringing ROI into reach.
Whatever the reason, a cash injection from the equipment you already own could be a viable alternative to traditional forms of funding. You will also have the added comfort of knowing you crucially still retain usage of the asset.
We’re here to support your office requirements and provide our on-demand expertise to help you stride forward. To discuss how we can work together, get in touch today.