How To Secure Asset Finance With A Solid Business Case
Business asset finance is used by a multitude of organisations to obtain business equipment that is vital for their development. It offers the ideal solution for businesses where new equipment is needed but is unaffordable when bought outright, due to cash flow restrictions. Business asset finance such as leasing can give you access to vital equipment without having to pay a large amount upfront. Instead, you can pay in smaller instalments for the use of the equipment. But let’s take a step back for a moment.
What are the first steps to accessing a business asset finance agreement for your company?
Vital equipment for your business requires funding, and the first step to accessing funding is getting sign off from the Board. To ensure sign-off, you’ll need to build a solid business case that covers all the information necessary to present to management.
Here’s how to put together a your business case for business asset finance:
1. Grab the attention of your audience
Whether they’re management or external investors, they’ll need to know the key points of your business case, including a clear understanding of what equipment is required for business development, forecasting, and a comprehensive understanding of how asset based-finance could support business growth. An executive summary of what to expect within your proposal will help to keep your audience engaged.
2. Forecast cash flow
Demonstrate that you understand the business’s current cash flow situation and how it could be affected if business equipment is bought outright. Use your cash flow forecasting to show the board how asset-based financing could ease the strain, significantly reducing capital expenditure and leaving the business in a much healthier position while still being able to access the equipment required.
Don’t forget to plan multiple scenarios in your forecasting and factor in seasonality, maintenance and repair costs, as well as total lifecycle costs. This is an excellent opportunity to present a realistic view of all eventualities to your investors. The best and worst case scenarios when investing in new business equipment should be explored. That way, when directly comparing your cash flow forecast for buying equipment outright versus using an asset finance solution, your case for using an asset based finance solution to fund new business equipment will be founded on detailed data.
3. Prove ROI on investments
Whatever equipment you require to support business growth, it’s important to demonstrate in your business case that the expenditure used to fund the equipment will result in increased efficiency, increased orders, and ultimately increased revenue.
This is a great opportunity for you to explore why new equipment will open doors for your business. This will be based on your specific objectives for the new equipment in question. Are you in need of new construction machinery to be able to cover projects on more sites simultaneously? Is your current IT infrastructure out-dated and causing delays to projects and client losses? Show exactly how this new equipment will benefit the business in terms of the bottom line with a detailed ROI forecast that presents the correlation between investment in equipment and increased revenue.
4. Why is business asset finance the answer?
Is your audience still questioning the adoption of an asset finance solution? Now is the stage to quell any remaining concerns, with a breakdown of the advantages of asset-based finance. Explore the following in your business case for those worried about the risks of an asset-based business finance solution:
• Flexible payments spread across a pre-agreed term
• Tax benefits through capital allowances
• A choice of lease agreements to suit your needs (choose hire purchase if you want to own the asset eventually)
• Need for collateral reduced
• Opportunity to update your business equipment at the end of the lease
Building a business case for an asset finance solution can be a lengthy process and one that you need to get right in order to receive sign off from the Board. Follow our advice above to ensure you make a compelling case for asset-based finance. An experienced lessor can provide you with answers to questions that Board members may ask of your business case. Get in touch with Anglo Scottish for all asset finance queries.