Leasing

WHY LEASE CATERING EQUIPMENT?

Leasing is a popular financing method for businesses to acquire new equipment while avoiding the hefty upfront costs that come with purchasing. It offers flexibility and accessibility, and virtually any type of equipment can be leased, from office supplies to industrial machinery. This scalability makes leasing suitable for businesses of all sizes and industries.

Leasing not only provides financial flexibility but also includes maintenance and servicing. This ensures optimal performance and reduces the burden on the lessee. Additionally, lease payments may offer tax benefits as operating expenses, resulting in significant cost savings compared to outright purchases.

Overall, leasing is a cost-effective and convenient means of acquiring necessary equipment. It supports business operations while conserving capital and maximizing efficiency.

SHOULD I PAY CASH OR LEASE?

Before you decide to buy the equipment outright, it’s important to consider the benefits of leasing. Leasing payments are rental payments, which can be claimed as a business expense. This means that if your business is making profits, the rentals you pay each year can reduce your tax bill, which is a great way to save money.

Lease payments are fixed throughout the lease contract, which means that increases in interest rates won’t affect you. This makes it easier to budget your cash flow effectively and plan for the future.

Leasing also allows you to save your cash for other business expenses like new stock, staff training, advertising, new business opportunities, and unexpected events. This way, you can use your money wisely and invest it in the growth of your business.

DO MY PAYMENTS INCREASE IF INFLATION OR INTEREST RATES RISE?

Certainly! Here’s the revised text:

No, your monthly payment is set at the beginning of the lease agreement and is not affected by any subsequent interest rate increases. This allows you to plan your cash flow more accurately. In the event of inflation, since your payments are fixed, the cost of the equipment decreases in real terms.”

ARE THERE TAX BENEFITS ASSOCIATED WITH LEASING?

Yes. If your business is planning to acquire capital equipment, it’s important to consider the most tax-efficient way to do so. By leasing equipment, all lease payments can be treated as allowable business expenses, which means you can receive tax relief for the entire duration of the lease agreement. Your accountant will be able to confirm this for you.

HOW DO I MAKE MY PAYMENTS?

Payments are typically made through Direct Debit on a fixed date each month or quarter. While quarterly invoice payments may be available on occasion, please note that banks charge an additional 2% fee for this facility due to the extra administrative work involved.

SHOULD I GO TO MY BANK?

Using your bank for all your business funding is not a good practise. 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 without further security such as taking a charge on your home. It is not financially prudent to have all your eggs in one basket.

WHO LEASES?

Nearly every market sector large or small benefits from leasing, from new start business to large established companies.

HOW DOES A LEASE WORK?

A lease agreement is a contract between you, the customer, and a leasing company. This contract allows you to use equipment over a specific period of time by paying rentals to the leasing company. With a typical lease agreement, you make regular payments, usually on a monthly basis, which helps with cash flow instead of a large capital outlay for the equipment.

HAVE THE BEST EQUIPMENT

With a lease agreement, you only have to pay one monthly payment in advance. This allows you to select the best equipment available with a minimal initial cash outlay. You can enjoy the latest technology and start generating additional profits before your next lease payment is due. The supplier is paid the complete invoice amount upon the equipment being delivered or installed.

EXAMPLE OF £1000 LEASE

For 3 years duration, for a business that has been trading for over 3 years:

Weekly Payments - £7.86
Monthly Payments - £34.06
Tax Relief @ 20% - £245.23

NET cost after Tax Relief - £980.93