Many of us are looking forward to 2021 with more optimism than they may have felt just six months ago – Close Brothers Asset Finance’s Business Sentiment Index shows manufacturers’ positivity is a par with 2018 levels.
But, old issues remain – Close Brothers’ latest research of UK SME business owners reveals three quarters of manufacturers admitted their cashflow was causing them significant stress, yet despite this, the same number were planning to seek funding for business investment in the coming 12 months.
So, what does this tell us? It says manufacturing firms can see the opportunities available to them but are not disregarding the issues they’re facing today in light of the difficulties brought on by the pandemic, including maintaining and protecting cashflow.
When the cash tap is turned off, as it was for many during the Covid-19 crisis, the options available to business owners can appear to be stark – pull down the shutters and maybe start again when, or if, things return to normal; go to your lender and ask for a payment holiday or apply for further loans to cover costs and hope for the best.
Or, you could take a step back and look to your physical business assets to prove their worth in ways you may not have thought possible.
For many years, during good times and bad, business owners have increasingly turned to asset finance to help them maintain cash flow.
But what is asset finance? In short, it’s an alternative form of funding used by businesses to obtain the equipment they need to grow or access much-needed cash. Asset finance makes the otherwise unaffordable affordable because it gives businesses access to the equipment they need without incurring the cash flow disadvantage of an outright purchase.
Agreements can also be customised to the business’s needs, with flexibility on both the term and repayment schedule.
There are various products that come under the broad umbrella of asset finance with one of the key ones being Refinancing or Capital Release, as it’s also known; it’s a proven way to make your assets work for you and release cash back into the business.
It’s pretty straightforward and works by the finance company purchasing the asset and financing it back to you, with repayments calculated in line with the income the asset is expected to generate; at the end of the refinance term, you own the asset.
This offers several great benefits to a business that just needs a cash injection, whether it’s for investment in additional business critical assets or to use in other areas of the business, including unexpected bills and invoices, salaries, VAT payments, diversification – the uses are almost endless. Clore Brothers can also look to take over a finance agreement with another provider and extend the term, ultimately reducing monthly payments and easing the pressure on cash flow.