Assessing Future Asset Finance Needs for 2025

Looking towards the prospective financial landscape of 2025, businesses must strategically assess their asset finance needs to stay ahead.

Understanding the Evolving Financial Landscape

The financial landscape is in a constant state of flux, influenced by technological advancements, regulatory changes, and market dynamics. As we approach 2025, businesses need to stay informed about these changes to make informed financial decisions.

Staying ahead means understanding the impact of economic trends, interest rates, and global market conditions on your asset financing strategies. This knowledge will help you navigate uncertainties and leverage opportunities for growth.

Global Growth

A deceleration in the US and Chinese economies might lead to reduced demand for exports, affecting sectors reliant on these markets. Conversely, it could also open up new avenues for UK businesses to explore alternative markets or innovate in response to changing global dynamics. Therefore, UK businesses must remain vigilant, adapting their strategies to mitigate risks and capitalise on emerging opportunities in this evolving economic landscape.

Inflation

The International Monetary Fund (IMF) forecasts that global inflation will decrease to 4.5% in 2025, a significant drop from the 6.8% recorded in 2023. This anticipated decline in inflation rates could have a multifaceted impact on UK businesses. On one hand, lower inflation may lead to reduced costs for raw materials and other inputs, potentially improving profit margins for companies. This environment could also result in more stable pricing strategies, allowing businesses to plan and budget with greater accuracy. On the other hand, the decrease in inflation might signal a cooling of economic activity, which could affect consumer spending and demand for goods and services. UK businesses may need to adjust their strategies to maintain competitiveness, possibly by focusing on efficiency improvements or exploring new markets to offset any potential decline in domestic demand. Additionally, lower inflation could influence interest rates, affecting borrowing costs and investment decisions. Therefore, UK businesses must carefully monitor these economic indicators and remain agile in their financial planning to navigate the changing landscape effectively.

UK GDP growth

The International Monetary Fund (IMF) predicts that the United Kingdom’s Gross Domestic Product (GDP) growth will maintain a steady rate of 1.5% in 2025, mirroring its forecast for 2024. This projection suggests a period of economic stability for the UK, providing a consistent backdrop for businesses to plan their strategies. However, this steady growth rate also indicates that the UK economy may not experience significant acceleration, which could impact sectors looking for rapid expansion. Businesses operating within the UK will need to consider this moderate growth environment when making investment decisions, as it may influence consumer spending patterns, employment rates, and overall economic activity. Companies should assess their asset finance needs and focus on optimizing their operations and exploring innovative approaches to drive growth within this stable yet restrained economic climate. Additionally, understanding the factors contributing to this consistent growth rate, such as domestic policies, international trade relations, and consumer confidence, will be crucial for businesses aiming to align their strategies with the broader economic landscape.

Projecting Business Growth for Accurate Financial Planning

Business Opportunities in 2025

Industrial Strategy

The UK government’s Industrial Strategy is expected to be published in spring 2025, and businesses have the opportunity to shape it through consultations and feedback sessions. This Industrial Strategy is a comprehensive 10-year plan designed to bolster the UK economy by fostering long-term economic growth. It aims to provide stability and certainty, encouraging businesses to invest confidently in high-growth sectors. The strategy will focus on eight key sectors for growth, including advanced manufacturing, clean energy, and digital technologies, which are anticipated to be the driving forces of the future economy.

By aligning themselves with this strategy, businesses could gain significant advantages, such as access to government incentives, funding opportunities, and partnerships that could enhance their competitive edge. Additionally, companies that proactively engage with the strategy may find themselves at the forefront of innovation, benefiting from the latest technological advancements and sustainable practices. This alignment not only positions businesses to thrive in a rapidly evolving market but also contributes to the broader economic objectives of the UK, ensuring a resilient and prosperous future.

AI and Automation

Businesses can invest in a wide array of cutting-edge technologies, such as artificial intelligence (AI), machine learning (ML), and automation, to significantly enhance various aspects of their operations. By integrating AI, companies can personalize customer experiences, offering tailored recommendations and support that meet individual needs, thereby increasing customer satisfaction and loyalty. Machine learning algorithms can analyze vast amounts of data to predict trends in procurement and logistics, enabling businesses to optimize their supply chains, reduce costs, and improve delivery times.

Automation, on the other hand, streamlines repetitive tasks, freeing up human resources to focus on more strategic activities, thus boosting overall efficiency and productivity. Furthermore, these technologies can provide valuable insights into consumer behavior and market trends, allowing businesses to make informed decisions and stay competitive in a rapidly evolving marketplace. By embracing AI, ML, and automation, companies not only enhance their operational capabilities but also position themselves for sustainable growth and innovation in the future.

Identifying Key Assets Required for Future Operations

As your business grows, so will your need for critical assets. Whether it’s heavy equipment for manufacturing or advanced computer systems for data management, identifying your business asset finance needs is crucial.

Hard assets in 2025

Tangible assets are physical items that maintain their value and are generally held for extended periods. They are frequently regarded as investable due to their inherent worth.

Examples of tangible assets include:

•  Vehicles, such as cars, trucks, and buses
•  Machinery and equipment
•  Plant equipment
•  Engineering equipment
•  Buildings
•  Inventory
•  Drilling machinery

Tangible assets can be advantageous investments because they: provide unique benefits not found in other investments, diversify traditional portfolios, offer competitive returns, and have a strong correlation with inflation.
Businesses often acquire tangible assets to boost revenue or enhance production. They can also serve as a safeguard against the loss or depreciation of other, non-physical assets.

Soft Assets in 2025

Soft assets are assets that are important to a business but have little to no resale value. They can be tangible or intangible and include:

• Computer software
• Office furniture
• Electronics
• Telecoms
• Epos equipment
• Audio visual equipment
• Security equipment
• Video conferencing equipment

Soft assets are less secure than hard assets, and may lose value entirely by the end of a finance agreement, but are usually crucial to the growth plans of businesses

Evaluate your current operations and pinpoint areas where new acquisitions can enhance efficiency and productivity. This assessment will guide your investment decisions and ensure that your business is equipped to handle future demands.

Evaluating Financing Options for New Acquisitions

Once you’ve identified the key assets required for future operations, the next step is to evaluate the various financing options available. From leasing to loans, each option has its own set of advantages and considerations.

Carefully assess the terms, interest rates, and repayment schedules of different financing options. Choosing the right financing method can help you manage cash flow effectively while acquiring the necessary assets for growth.

Navigating the landscape of commercial asset finance can be challenging due to the numerous options and complex terms. However, enlisting the help of a specialist finance broker can be invaluable. These experts use their knowledge and industry connections to secure the best deals for you. With a comprehensive understanding of the financial environment, they can guide you through the complexities of financing choices, ensuring you pick the most appropriate one for your business. This can save you considerable time and money, as they are skilled in negotiating favorable terms on your behalf. Moreover, a finance broker can provide personalised advice tailored to your unique situation, aiding you in making informed decisions that align with your long-term financial objectives. This strategic collaboration not only streamlines the process but also boosts your ability to obtain the necessary funding to support your business’s growth and operational needs for 2025 and beyond.

If you are currently assessing your asset finance needs for 2025, contact a member of our team to find out how we can help.