Furniture Leasing Explained

Leasing is a method of funding. Instead of using cash flow, money from savings, credit cards or bank loans. Simply set up a Direct Debit with a fixed payment per month and have the equipment you want there and then.

The Leasing company will settle the suppliers invoice in full without you worrying how you are going to pay.

Leasing is probably the most popular method of purchasing equipment today. The majority of customers purchasing new equipment will lease. This allows them to have the best equipment without the worry of using cash flow.

At the end of the agreement, you can own the goods for one extra monthly payment. If the equipment is looking dated or simply behind the times, you can upgrade to brand new modern equipment. The supplier will take away the old equipment and replace with brand new equipment allowing you to have the best and latest equipment, keeping existing clients happy and attracting new clients from your competitors.

You may be able to afford to buy the equipment outright, but before you make this decision, you must consider the following:

• Will I be making other purchases in the next few months/years that I will need me to spend my money on?
• Leasing enables you to save your cash for other purchases such as new stock, staff training, staff wages, rent, Advertising, new business opportunities and unexpected happenings.
• By leasing the equipment this will allow you to have the best equipment at an affordable weekly price
• Most Business like to refresh every 3-5 years this allows you to attract new clients and produce better quality service.
• Buy assets that appreciate rent/lease assets that depreciate
• Would you pay your staff 3/5 years' salary upfront? Why not do the same for equipment simply pay as you use and earn from it.

Yes. A business wishing to acquire capital equipment has to seek the most tax efficient way when doing this. All lease payments are treated as an allowable business expense and therefore attract tax relief for the full duration of the lease agreement. Your accountant will be able to confirm this.

Using your bank for all your business funding is not seen as good practice. If you use all your overdraft facilities, you leave yourself in a vulnerable position to react to any unexpected needs of short-term borrowing. Your bank may change the interest rate mid-way through a loan or reduce your overdraft facilities, which can dramatically affect the cash flow of your business.

Sometimes banks will limit the amount they will lend you. You need your bank for day to day business. Banks often will want further security such as taking a charge on your home or placing a debenture on the business. It is not financially prudent to have all your eggs in one basket.

This enables you to choose the best equipment available with the latest technology to earn the extra profits this generates before your next lease payment is due with payments spread over pre agreed timescale.

Trading less than 3 years :

• You must have no CCJ's or defaults.
• Business or personal bank statements mush show no missed payments and must remain inside any agreed overdraft.
• Must have a valid passport or driving licence.
• You or a partner / director of the business must own a property in the UK.
• If no property is owned, a home owner gurantee would be required.

Trading more than 3 years :

• Must have a valid passport or driving licence.
• You must have no outstanding CCJ's or if there is, a valid reason behind it is required.
• Non-homeowners are ok.

These are guidelines only and subject to status.