Asset Finance
Asset finance is an alternative funding solution to support the acquisition of new or additional assets. Outright purchases can be a significant drain on working capital and not always the most efficient way to manage capital expenditure.
There are a range of asset finance options open to customers and these can be summarised as follows:
- Hire Purchase – the payment of a fixed amount across a specific period to cover the cost of the asset.
- Operating Lease – Allows you to lease your asset from a provider over an agreed period.
- Finance Lease – Allows you to lease the asset from a provider over an agreed period. Repayments are spread over the economic life of the asset and can typically be tailored to customer requirements.
- Contract Hire – covers vehicle fleet management, repair, maintenance and productivity.
What are the benefits?
- Can often expedite access to modern technology and the resulting financial benefits that can bring
- Improved cashflow for the customer
- Can often be a tax efficient depending on the tax allowances available
For further information please contact your local corporate bank or through the Finance & Leasing Association by telephone on 020 7836 6511 or by email info@fla.org.uk
Trade Finance
Trade Finance covers a range of solutions to help mitigate financial risks such as nonpayment or delayed payment.
Trade Finance can work for your business at 3 levels:
- It is a source of working capital that helps balance sums owed to suppliers, whilst funding credit terms to buyers
- It is a potential tool to reduce some of the risks associated with trade
- It is closely linked to ultimate payment.
What are the benefits?
- Reduced risk through a secure and reliable process
- Improved working capital and accelerated cash flow.
Further information can be provided by your local corporate bank
Invoice Finance
Invoice Finance is a source of short‐term funding and has the capacity to increase in line with the expansion of a business. Invoice financing can give businesses a timely cash injection by releasing money tied up in outstanding invoices, effectively providing an ongoing
supply of capital that is linked to company sales.
As an invoice is raised, it is sent to the Invoice Finance provider and typically, 85% of the value of that invoice is released within a very short time period e.g. 24 hours. The remaining value, less a small service fee is paid once the customer settles the invoice.
What are the benefits?
- Immediate injection of cash against outstanding invoices
- Release a significant portion of the invoice value in UK and also overseas markets, improving cash flow
- Flexible financing as Invoice Finance provides an ongoing supply of cash against invoices as they are raised
Further information can be be provided by your local corporate bank or through the Asset Based Finance Association (ABFA)
Supplier Payments
Supplier Payments can enable buying organisations to make early payments and ease the cost cost of supplier finance, thereby supporting their supply chains. Suppliers finance the period between an order being placed by a customer and the subsequent payment being received.
Supplier payments is a service which uses a company’s financial strength to provide lower cost cost finance to suppliers. The buying organisation simply notifies the supplier payments provider provider of invoices that have been approved for payment. The supplier payments provider immediately offers early payment to the supplier ahead of the agreed trade terms. A small deduction is made from the invoice value paid to the supplier, however, this is considerably less than the traditional forms of supply chain finance.
What are the benefits?
- Buying companies benefit from an improved working capital position and enhanced working relationship with supplier companies.
- Suppliers receive early payment, improving their working capital position and a reduced cost of funding.
For further information please contact your corporate bank.
