We frequently arrange machine finance for businesses involved in the engineering, manufacturing and production industries. It is fairly typical for machinery leasing to be used as the mechanism for financing the equipment that our clients need.
Machine leasing is efficient as it allows the capital that would otherwise be tied up in buying a new machine to be freed up for other uses within the business. In essence what the business does is to use the revenue generated by operating the machine to help fund the payments for the machine.
Many of our customers find themselves in the position where they know that they need to purchase a new item of machinery but the capital costs seem prohibitive, especially when cashflows are tight. If they take a different perspective and look at the monthly profit generated by the machine compared with the monthly lease payments that would be due under the machinery lease then it often becomes a straightforward decision. The net result is that the business achieves better production output and efficiency with more predictable budgeting of costs.
In general the lease payment can 100% be offset against profits so that machine leasing is a tax efficient method of accounting.
We had a client which was an engineering business in the early stages of development. They required a computer controlled lathe as a key item of equipment and were struggling to raise finance for this. Our brokers reviewed the client’s requirements and sourced a suitable machine lease for them.
Another client decided to purchase a machine for their production line from Europe. Their own bank was originally going to provide finance for the purchase but withdrew the finance offer at the last minute, causing great stress and frustration for our client and potentially endangering the whole investment. Our brokers then pulled together a proposal on behalf of the client and sourced the required machinery finance within seven days, enabling the purchase to go ahead.