Finance houses are becoming savvy to industries such as hospitality that battle with seasonality and are coming up with ways to make buying decisions less painful. Operators can now source the kitchen equipment they want on terms that don’t blow a hole in their balance sheet, writes Stephanie Jones of Moore Finance Limited.
The hospitality and catering industry is heavily impacted by seasonality and changes in the economy, at times putting a strain on cash flow and affecting productivity. The peaks and troughs influence buying decisions, and during the low ebbs companies make do with broken equipment and put up with tired interiors at times when they need to be fully functional and ship-shape ready for busier periods.
Equipment can fail at any time, soft furnishings can easily become damaged, advertising opportunities can arise, marketing drives to drum up new business need to be funded, overheads for big events can creep up, vehicles break down and opportunities to refurbish during downtimes present themselves, demonstrating that the right time to buy, replace or refurbish isn’t always the best time.
With a wide range of financial products now available on the market, businesses have greater choice and other options rather than having to jump through hoops and face a raft of declines from banks. Finance houses have become savvy and sympathetic to industries that battle with seasonality and in response launched products that are sensitive to the demands of reactive businesses.
Wouldn’t it be great if you could get a cash injection for your business and pay it back based on seasonality, directly through your merchant card terminal? Business loans are now available that follow the seasonal flow of a business and carry no fixed term. And, the repayments are taken automatically from credit/debit card terminals — so when your business can afford to make a repayment it can, based on the income generated via the card terminal.
Having the latest equipment in commercial kitchens, hotels, pubs and other operations can have a huge impact in the front- and back-of-house areas. It can increase productivity, output and quality, as well as change the customer’s perception and their experience in your establishment. It can also potentially reduce your carbon footprint and environmental impact.
Your staff are able to work more efficiently because of the technical abilities certain equipment brings, such as kitchen equipment, and they are happier as a result of customer feedback in the case of the introduction of new furniture and interiors. And leasing can provide the ideal solution for a business looking for the latest asset or simply looking to replace broken or old equipment, even when cash isn’t an issue.
Finance is key to any business looking to evolve and grow”
So, what are the benefits of leasing? All payments made under a lease agreement are 100% tax deductible and often mean that it’s cheaper to lease than purchase outright. At the end of a lease agreement a final payment can transfer title ownership so you own the equipment outright, or it can be upgraded to the latest technology, keeping you ahead of the competition and relating to your growth.
Leasing allows you to preserve working capital and allows for simple budgeting, easing cash flow, while flexible repayment periods can be offered depending on circumstances. Additionally, servicing and maintenance of the equipment can be included.
Existing assets in a business such as commercial catering equipment, laundry equipment, furniture, refrigeration kit, IT equipment, phone systems and vehicles can all be refinanced to provide you with some immediate capital. And once an agreement is in place, you can benefit from all the positive effects leasing can bring.
Finance for business can sometimes carry negative connotations and it can be perceived that a business must be struggling if it needs an injection of cash, but this isn’t always the case. Finance is key to any business looking to evolve and grow, and without the injections of cash at the right time can make developing a company an uphill battle and often result in failure.
Take time to review, carry out a financial audit, compare your options and ease your cash flow so you can breathe easier, stay ahead of your competition and, most importantly, grow.
Tax deductible and no capital outlay
All payments made under lease agreements are fully tax deductible, so finance firms claim that by leasing rather than buying equipment, companies can offset the full amount (100%) of each year’s lease rental payments against corporation tax, instead of an annual tax allowance of only 25% on the capital value of the equipment, which diminishes each year.
Operators also get immediate use of the equipment without capital outlay because the cost of the equipment can be spread over its working life. As the rentals are based on the cost of the kit at today’s prices and paid from tomorrow’s income, advocates insist they represent a safeguard against inflation.
Stephanie Jones is marketing manager of Moore Finance Limited, a specialist in finance leasing. www.moorefinance.com