It's now possible to factor your UK government invoices

Small UK companies trading with the public sector have historically had cash flow management problems due to the inability to assign government receivables debt. This created a barrier for SME's trying to enter this market place. Although factoring or invoice discounting of trade debts was not specifically disallowed, in practice the relevant public sector contracting authorities never gave consent thereby limiting SME's ability to compete.

Thankfully this position changed in this years budget and it is now possible for firms supplying goods and services to government departments to assign public sector invoices to specialist debt financing lenders without prior approval. If your company would like to know more about factoring debts we recommend reading public sector debt factoring for more information.

Why Do Businesses Choose to Lease Equipment rather than Buy?

When seeking any type of commercial finance, there are few areas of business funding that offer 100% finance availability. One area where 100% finance is available is asset based finance for equipment such as plant & machinery, computer hardware etc. In fact it is possible to lease any kind of equipment or asset, in many cases without any deposit, advanced rentals or extra security.

Many people in business think that leasing is for companies short of cash, in some instances that may be the case, but a little research shows that even the biggest companies use leasing to access assets essential to the running of their business.

One reason this finance option is a regular choice is the relative ease with which a leasing arrangement can be set up along with flexible payment terms, plus, other financial tools will still be available to the company. However the main factor in deciding to lease is cost, for most businesses the overall cost of leasing any particular asset or piece of equipment is lower than a cash purchase once loss of interest on cash on deposit and tax rules and deferred VAT payments are taken into account. It should be noted here that this rule may not hold for all businesses for example, start up companies or where poor credit history applies. Whatever individual circumstances apply, your accountant can offer professional tailored advice on any likely savings.

Unlike other finance options leasing offers fixed payments for the term of any agreement therefore easing cash flow management by not reducing working capital available to the company. Other major benefits of leasing is the possibility of upgrading or keeping technology up to date if the right finance option is taken out, adding new equipment to any arrangement is also very easy, especially once a payment record has been established. If you do not take ownership of the leased asset at the end of the term then the lender will have responsibility for it's disposal.

Finally, by opting to lease, funds can be retained within the company to aid growth, but also the opportunity to acquire access to more or higher specification equipment can add significantly to that growth.

I recommend you visit our Business Equipment Leasing page for more information on the topic of leasing.

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