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How Commercial Asset Finance Can Help Your Business Stay Competitive

Need new assets to expand your business but don’t want to incur major upfront costs? Commercial asset finance could be the best solution for your business. As a business owner, you’ve likely faced the challenge of wanting to expand your business–whether that means hiring more employees, moving offices, diversifying your product/service offerings, or most importantly, accessing the latest technology. However, finding the funds to do so can be challenging.

Rather than taking out a traditional loan to finance new equipment outright, commercial asset finance can be a more economical, flexible alternative. This article will explore how commercial asset finance can help your business remain competitive.

Commercial Asset Finance – Explained

In essence, commercial asset finance is designed to help businesses obtain pricey assets: computers, printers, office equipment, vehicles, and more, without having to pay for the full cost of it upfront. Instead, the costs are spread across equal loan payments over a fixed period of time. This enables businesses to keep costs at a minimum, allowing them to invest in other, more pressing growth opportunities.

There are three main types of commercial asset finance:

Leases are the most common type of asset financing utilised by businesses. It allows businesses to use an asset for a fixed period of time with payments made regularly. At the end of the lease agreement, the business may have the option to purchase the asset at its current value.
A hire purchase is similar to a lease but it comes with the intention of owning the asset at the end of the payment term.
A chattel mortgage is when the business is keen on owning the equipment from the get-go. The borrower takes ownership of the asset from the very beginning, but uses it as collateral for a loan.

Benefits of Commercial Asset Finance

Curious about how asset financing can help your business grow? Benefits include:

Capital Preservation

Without significantly depleting your working capital, you’ll be able to acquire the necessary tools needed for growth. By strategically spreading payments over time, asset financing helps businesses maintain a healthy cash flow which is crucial for immediate investments. In the long run, this helps maintain a sustainable business model.

Tax Benefits

According to Commonwealth Bank Australia, an instant asset write-off deduction may be available– if certain eligibility requirements are met. For example, for chattel mortgages and hire purchases, deductions may be available for costs associated with depreciation, interest rates, and operating expenses. Likewise, businesses may also be able to claim GST input tax credits upfront.

Moreover, in terms of leases– loan payments may be tax-deductible. Some businesses may even be entitled to claim GST input ax credits in their Business Activity Statement.

For more information on this, it’s important to enlist the help of a taxation expert or an insurance broker. An experienced broker can help with providing all the necessary policy documentation and payment breakdowns so your tax advisor can claim deductions accordingly.

Improved Flexibility

There are a range of commercial asset financing options available for businesses to choose from. Each option is designed to cater to the distinct needs of a business. This allows them to choose the option that best suits their immediate and future needs based on their financial goals, operational efficiency, and ideal growth trajectory.

Need help determining the right type of commercial asset financing for your business? An insurance broker can help tailor financial solutions to meet the specific needs of each business through partnerships with a range of providers, securing better rates and terms.

More Risk Averse

Businesses are able to assess and mitigate any potential losses associated with the acquiring and ownership of assets. This is because business success isn’t always guaranteed.

So, if there’s ever the likelihood of defaulting on the asset finance agreement, the business will only lose asset ownership and not necessarily be liable to any other major risks. While unfortunate, it’s a preferred option.

Access to Latest Technology

To always be one step ahead of the curve, businesses need access to the latest technology. Commercial asset based financing enables businesses to gain access to the best equipment available in the market without needing to worry about budget limitations.

Morgan Insurance Brokers – Your Commercial Asset Financing Partners

If you’re considering commercial asset financing to grow your business, do not hesitate to contact Morgan Insurance Brokers for access to the best asset financing options. With our industry connections, our team of experts will help you secure a better rate and term.

by umar

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5 Common Mistakes to Avoid When Financing Business Equipment

Looking to grow your business exponentially? As a business owner, you understand that having the right, up-to-date equipment can significantly enhance your operations. But where do you begin? While there’s plenty of information available online, it’s important to weigh several key factors before committing to any agreement.

In this article, we’ll walk you through the five most common mistakes entrepreneurs make when financing business equipment, and how to avoid them.

What is Equipment Financing?

Imagine this: Computers, printers, coffee machines, cars– all ready to use without needing to pay for them upfront. In essence, that’s what equipment financing is all about.

It’s an agreement between you and your equipment provider where you make regular payments over a set period in exchange for the use of the equipment.

Essentially, it works like a loan, with the amount and terms typically dictated by the equipment’s price and value. Once all payments are made, the equipment may be yours to keep.

5 Mistakes You May Make When Financing Business Equipment

1. Not Considering ALL Your Options
  
  One of the biggest mistakes you can make as a business owner is not shopping around. There are a range of equipment financing options available to businesses such as finance leases, commercial hire purchase contracts, and equipment loans.
  
  Don’t rush into agreements without comparing multiple options from both traditional and non-traditional lenders such as banks and specialist equipment financing companies.
  
  For more information, use a broker to help you source the best deal. By enlisting the help of a broker, you’ll be able to gain access to terms with favourable interest rates, payment flexibility, and be well-informed about any payment penalties.
2. Overlooking Final Costs
  
  Another major and costly mistake businesses make is overlooking the total costs of equipment ownership. This involves maintenance, insurance, interest, and downtime costs. These unexpected costs can vary over time and while initial cost of ownership may be low, hidden fees may crop up making the loan more expensive than anticipated.
  
  You certainly don’t want to take on too much debt when it comes to financing your business equipment. So, it’s always best to go through every term and condition carefully to have a rough but relatively accurate estimate of the total expenditure before signing on to an agreement.
3. Not Taking into Account Future Needs
  
  When you get into an equipment financing partnership with a lender, it is crucial to have a solid business plan in place. Without a proper plan, your loan application will seem weak– turning away prospective lenders or resulting in unfavourable agreements terms .
  
  In turn, this short-sightedness will impact the future needs of your business. Hence, when seeking a partnership with a lender, a few factors to consider include repayment terms, equipment upgrades, and early payouts without penalties.
4. Skipping Out on Tax Benefits
  
  The Australian Taxation Office (ATO) offers a range of incentives for businesses investing in equipment. To make the most of them, here are some golden rules:
  - Some businesses may be eligible for an instant asset write-off where you may claim an immediate deduction for an eligible asset.
  - You might gain access to GST credits on eligible purchases if you have valid tax invoices.
  - Keep in mind the depreciation rules that apply to different types of equipment.
  - Always be strategic about the timing of your purchases.
  - Seek the help of a professional to ensure you’re making full use of available tax benefits.
5. Not Getting the Right Advice
  
  Not getting the help you need from the get-go can be a costly mistake in the long-run. Whether it’s tax experts or insurance brokers, it is necessary to count upon the expertise and skills of financial experts in determining the best course of action for your business.
  
  By utilising the expertise of a professional, you’ll more than likely secure the best possible deals and terms when it comes to equipment financing.
Take Control of Your Business

Explore your financing options with the help of our team of brokers at Morgan Insurance Brokers. We’ve cultivated relationships with various lenders– from banks and leasing companies to private investors, ensuring that we’ll source the best possible deal on your behalf.

Throughout the financing process, we’ll navigate all complexities associated with the paperwork and administrative tasks, providing you ongoing support and guidance throughout the financing process. Most importantly, we’ll ensure that your business equipment is properly insured.

Sometimes, all it takes is a simple partnership with an insurance broker to skyrocket your business success. Reach out to us today.

by umar

How to Use Asset Finance to Boost Your Business Growth ?

When starting a business, one might find that there are limited options for funding or borrowing money, largely due to a limited credit history. However, after the initial years of operation, your business may have reached a stage where it’s ready to propel its growth.

One beneficial way to do this is by using asset-based financing as part of a larger business strategy. Instead of investing a large sum of money upfront to acquire necessary equipment and machinery, businesses can spread the cost over time with small, regular payments. This, in turn, enables businesses to preserve working capital while allocating funds to other core areas of growth. Similarly, with existing assets, one can opt to refinance them, further elevating their existing value.

This can be especially beneficial for startups by allowing them to gain access to vital equipment with manageable monthly payments. Essentially, by strategically employing asset finance, businesses can not only improve their cash flow but also promote long-term growth. Whether new or established, asset finance is a valuable tool for businesses to consider.

What is Asset Finance?

Asset finance is a relatively straightforward funding alternative that allows businesses to acquire essential assets without a large, upfront investment. At the same time, it allows businesses to start utilizing those assets while still paying for them. Businesses also have the option to refinance existing assets.

A variety of assets can be obtained through asset finance, including vehicles, machinery, technological infrastructure, furniture, and hardware. These assets tend to be tangible items that assist and improve a business’s performance.

Essentially, asset finance provides access to high-quality equipment that may not be affordable to purchase outright. This then allows businesses to expand their operations without putting a strain on their working capital. They will have the opportunity to raise finance simply through their existing assets.

Types of Asset Finance

There are a range of asset finance options, each with different terms and benefits.

A hire purchase enables businesses to own the asset at the end of their term. However, till then the finance provider retains ownership of the asset.
A finance lease enables a finance provider to purchase the asset and then lease it to the business. The business makes monthly payments, and at the end of the lease can either choose to extend the lease, return the asset, or sell it on behalf of the provider.
An operating lease is suitable for businesses that require an asset only for a specific period of time. The provider retains ownership of the asset but the business has the option to upgrade to newer models throughout the leasing period.
A contract hire is specifically designed for vehicle-related leasing. The provider manages the sourcing and maintenance of the vehicles, while businesses make regular payments for usage of the vehicle over the specified lease term.
A sale and leaseback involves businesses selling an existing asset to a finance provider, and leasing it back. This enables the business to free up capital whilst retaining usage of the asset.

How to Make the Most of Asset Finance?

First, start by acquiring the essential assets you require, whether it’s vehicles, machinery, office furniture, and more.
Next, strive to improve your cash flow by spreading the cost of your assets over time. This is especially important to maintain liquidity and ensure that your business can meet its current operational expenses.
Third, consider asset refinancing. This enables you to unlock the value locked inside your existing assets. Gain the ability to release a lump sum of cash without interrupting your right to use your assets.
Fourth, make sure your asset finance agreement enables you to access the latest equipment available in the market.
Fifth, determine the tax benefits you may gain from asset financing. Some forms of asset finance can be fully deducted as a business expense, hence reducing your taxable income.
Sixth, make sure to plan and budget confidently. The fixed repayment schedule often associated with asset finance makes budgeting easier and more efficient.
Last but not least, use a broker. Experienced brokers can simplify the whole asset financing process for you. They’ll help you gain access to better deals and ensure you receive expert guidance throughout your partnership. Brokers typically have relationships with multiple lenders, hence the ability to sift through multiple options to find a financial provider that best suits your needs.

Need an experienced broker to help you leverage the power of asset finance? Contact Morgan Insurance Brokers today!

by Mojo Dojo

Top Benefits of Financing Your Business Assets vs. Buying Them Outright

While purchasing business assets outright may seem appealing, it's crucial to consider the financial implications for your business. The substantial upfront capital expenditure could negatively impact your business's performance and future growth. Furthermore, tying up a significant amount of capital in assets might lead to missed opportunities for more profitable investments in the near future.

Hence, this is where financing options like asset finance provide a more flexible and appealing approach towards preserving your working capital whilst still obtaining the required assets.

Nonetheless. It's important to carefully evaluate all your options in order to make an informed decision about how to best acquire the assets your business needs.

What is Asset Financing?

Asset financing is a flexible funding method that enables businesses to acquire new or used assets. It is a highly recognisable source of financing, and is often used for assets that generate revenue when used. Rather than spending a lump sum of money on an asset, financing it allows businesses to spread the cost of the asset over its lifespan.

There are several types of asset financing options available:

Hire purchase involves the business paying a deposit initially, and then fixed monthly instalments. The asset then becomes the business’s property after the final payment is made. This is an attractive option for businesses who want to invest in heavy and/or expensive machinery.
Finance leases enables businesses to utilise equipment for a fixed period of time whilst also being responsible for maintenance, repairs, and operational costs. This is an appealing option for significant assets like factory plants.
Asset refinancing is a suitable option for businesses who already invested in equipment but are keen on unlocking its hidden value. Here, the lender would buy the equipment and then lease it back to the business over a specified period.
Operating leases are contracts that permit the use of an asset without the need to transfer ownership. This means businesses can avoid the high costs associated with purchasing altogether.

Benefits of Asset Financing

If you’re considering asset financing as a viable option for your business, here are several core benefits that might help facilitate your decision.

Asset financing enables your business to preserve cash flow. By avoiding large upfront costs, you can utilise your funds for other essential expenses and investments that can help generate profits.
With asset finance, your business gains access to higher-quality assets that you may not have been able to afford. This in turn can help your business maintain a competitive edge, thus improving your revenue generation.
Asset finance agreements come with flexible repayment plans. These plans can typically be tailored to meet the needs of your specific business, with options available for varying deposit sizes and seasonal payment plans that align with your business’s busiest and quietest periods.
Asset financing payments are often tax deductible. This in turn lowers your business’s taxable income, thus providing further savings.
By avoiding ownership responsibilities, you save business time and money on tasks like decommissioning, packaging, transportation, and re marketing.
Gain access to the latest technology which may be too costly to purchase outright. As a business, regularly replace your older assets with new, updated ones that help you increase your productivity and profitability.
Effectively manage capital and debt through asset financing. Since your capital is not tied up in equipment, you can use it to pursue new opportunities, expand your operations or make strategic acquisitions. Likewise, savings from asset financing can be used to pay off existing debt or secure other core facilities.
Be able to benefit from inflation. With payments made in instalments with fixed rates, inflation works in your favour as the value of money depreciates. This is because you’ve purchased the usage of your assets at a discounted rate.

Disadvantages of Buying Assets Outright

Purchasing assets outright can present several drawbacks for businesses, especially small and medium-sized enterprises.

- Outright asset purchases require a large initial capital outlay which can strain your businesses ability to finance other essential purchases.
- Spending a large amount of money on an asset can reduce your cash flow, hindering your ability to operate optimally.
- If your business takes out a loan to fund an asset purchase, it may miss out on potential investment opportunities that could yield higher returns and accumulate additional liabilities such as higher interest rates.
- Costs associated with deprecation, maintenance, and upgrades can be substantial, straining overall business finances.

While outright ownership of assets seems appealing, it does come with a lieu of financial challenges. Choosing the most appropriate method to acquiring assets requires a careful evaluation of your business’s current financial situation and long-term goals.