Listed in: Finance & tax

Grow your business through asset finance

If you’re looking to finance a work vehicle or new equipment, Asset Finance could help you boost your business without parting with hard-earned cash.

3 minute read

You don’t always have to pay cash for high-value asset items, even if you have the cash ready to go. Often, it’s better to have a little finance debt (provided it’s manageable), so you can save working capital to grow your business.

Asset Finance allows you to align repayments around your cash flow situation and can even allow you to claim tax deductions (depending on your business). 

What you can use Asset Finance for

Kiwi businesses use asset finance to fund an assortment of new or used assets, including:

• vehicles – from company cars and trucks, to vans for tradespeople
• manufacturing equipment – such as factory machinery, or other specialist technology
• agricultural equipment – almost anything on or around the farm
• forklifts and excavators – from light forklifts to cranes and diggers.

Decide what you really need

Before seeking finance it’s a smart idea to sit down and decide on the type of assets that are really going to grow your business. If you’re weighing up a new purchase, check it against the following criteria.

Will the asset allow you to:

• operate more efficiently, such as utilising the latest technology or practices?
• grow your business, perhaps by using equipment to overcome production limitations or enter new markets?
• become more competitive in the market, e.g. by matching or exceeding the capability of your key competitors.

If you answered ‘yes’ to each, there’s a good chance you’re making the right decision.

Knowing how and when your equipment will generate income will help you determine the best way to pay for it. You should also assess the expected productive life of an asset – there’s little point spending up large on an asset that’s going to wear out or become obsolete before you generate a return on your investment.

Improve capability

Asset Finance can be a great option if you’ve just picked up a new contract or project but you don’t have the assets to meet an increased workload. Even if you’ll be paid at the end of the project, Asset Finance gives you the ability to go and buy big ticket items now without having to worry about raising the capital.

Leverage your existing assets

You can reduce costs further by using existing equipment as security instead of personal or other business assets, so you can release capital back into your business. This reduces stress and potential risk as you don’t need to use your family home or business premises as security on the loan.

Reduce your costs by buying used

Do the assets you need really have to be brand new or could you save by purchasing second hand? Most businesses can save considerably on everything from production equipment to trucks by:

• attending local auctions – many are held weekly
• bidding on online auction sites such as Trade Me
• attending local closing-down sales or reviewing classifieds in industry journals.

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