For small businesses, there’s no question about it – cash flow is king.
Unfortunately, thanks to the GFC, keeping cash flowing and preserving a line of credit is proving a challenge for many Australian businesses. According to a recent Dun & Bradstreet report, the average time it takes to get an invoice paid in Australia has risen to 53.4 days. Furthermore, many small businesses are finding it difficult to acquire the capital they need from traditional lending institutions, especially the big banks.
One way businesses can obtain the equipment they need to expand is to lease the equipment instead of buying it outright.
When you lease equipment, you’re paying for the long term use of the equipment, much like you would pay for the use of your office space or commercial premises.
In this way, businesses can obtain new machines and the latest technology without the costly upfront overheads — and you won’t necessarily have to deal with the stringent requirements of banks and other lending institutions.
Why is equipment leasing a smart option when it comes to finance?
Leasing isn’t just for office equipment and IT needs. No matter what industry vertical you’re in, you can lease practically any asset for your business. When you lease equipment, you’re paying for the use of the equipment throughout its useful life, rather than for the ownership of the asset. This gives you a number of advantages:
Fixed monthly payments:
Fixed monthly payments allow you to forecast and budget effectively so you can keep cash flowing which can help to ease the financial strain on your business.
Avoid equipment becoming obsolete:
Leasing equipment makes it easy to regularly upgrade and keep your business to date. Leasing can help you avoid your equipment becoming obsolete so you can stay competitive in the marketplace.
Bundle your equipment:
You can get all of your equipment in one lease, making it easier to manage all of your assets across the business. You’ll also have the option to add more equipment to you lease throughout your agreement, so you get a complete solution.
Can be tax deductible:
Because lease payments are usually accounted for as an operating expense, your monthly payments can be up to 100% tax deductible – so it’s a great cash flow finance solution for your business. Speak to your tax advisor to see if you qualify.
FlexiCommercial offers 3 easy leasing options for your small business
As a leading finance provider, FlexiCommercial understands the unique needs of small businesses. Our three equipment leasing products are specifically tailored to SMEs to help you get the equipment you require:
Make easy monthly payments to lease the equipment you need throughout its useful life. This option is great if you’re looking to acquire one or more assets for your business operations.
Master Rental Agreement:
You can be approved for a business line of credit to lease the equipment you need. This is a great option if you need more than $20,000 worth of assets for your business in a single year.
A finance lease lets you get the equipment you need to start making money right away. Low monthly payments are cash flow friendly so you can keep your business up to date. A fixed pre-determined residual payment will be due at the end of your term, so there are no surprises.
No matter what business you’re in, you’ll find that leasing is a great way to really grow and expand your operations without disrupting your cash flow. It’s the smart way to get finance for your all of your equipment and capital needs.
Anthony Roberts is the Head of Vendor and Commercial Finance for FlexiCommercial. You can read more of his finance insights on the FlexiCommercial http://flexicommercial.com.au/blog