Paying cash for equipment can appear straightforward, but it may tie up funds needed for stock, wages, marketing or unexpected costs.
Match cost with use
Spreading payments over a suitable term can align the cost of an asset with the period in which it helps generate revenue. The appropriate term depends on the asset’s expected life and likely value over time.
Consider the asset itself
New and used vehicles, machinery, technology and specialist equipment may be treated differently. Supplier, age, condition and resale market can all affect the options available.
Protect operational flexibility
Retaining cash can give a business more room to manage seasonal demand or invest elsewhere. The benefit must still be weighed against interest, fees and any deposit required.
Compare ownership and end-of-term options
Different structures can affect ownership, accounting and what happens at the end of the agreement. These points should be understood before proceeding, with appropriate tax or accounting advice where needed.