Benefits of Equipment Finance

The major benefit of equipment finance or asset finance is the fact that you avoid having to make large upfront lump sum capital payments when buying new equipment for your business.  You can budget for regular payments for the equipment funding which should give most companies excellent cashflow benefits.

The most common form of equipment finance tends to be hire purchase since it gives you the flexibility of making regular payments with the option to take ownership of the equipment at the end of the hire purchase contract.

Operating leases are classed as an expense and not as debt when preparing your accounts.  This means that your company should have greater financial flexibility and taking on the asset should not impact your credit ratings in the same way as a commercial loan.

Lease payments are generally classified as expenses which means that they help with tax efficiency when considering equipment financing as a funding option.

Different lease structures exist giving good flexibility.  Some will enable you to include the costs of servicing and maintaining equipment within your regular payment, some will enable you to vary payments in line with seasonality of your business, some will enable you to make smaller payments initially and then larger final payments.  The possibilities are endless when it comes to equipment finance.
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