What is asset finance?

Invoice Finance8th June 20170 CommentsJules Boyle

If your business has fixed assets, plant and machinery or vehicles, you could benefit from using asset finance to release working capital or help purchase new equipment.

What is it?

Asset finance is a type of finance used by businesses to obtain the equipment they need in order to grow, which usually involves paying a regular charge for use of the asset over an agreed period of time – avoiding the full cost of buying outright.

This type of finance can be used to fund any asset, from telephones and photocopiers to forklift trucks and aircraft. This type of funding is one of the most popular funding solutions available.

How does it work?

The leasing company (lessor) buys and owns the equipment on behalf of the customer (lessee). The customer pays a rental for the use of the equipment over a predetermined period.

What are the benefits?

There are a number advantages Asset finance provides for the customer, these are:

  • It improves and simplifies cashflow management to help you budget effectively and help control your outgoings
  • It gives businesses access to the equipment they need without incurring the cashflow disadvantage of an outright purchase
  • Finance agreements can often be tailored to the business’ needs, with flexibility on both the term and repayment schedule
  • Asset finance providers often specialise in a particular type of asset about which they have expert knowledge

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