Fleet News

Finance matters: Make maximum use of your company’s assets

In the economic environment that we currently find ourselves in, cash is king.

As a result, it’s more important than ever that companies structure their balance sheets in such a way as to make optimum use of their assets.

It isn’t uncommon for firms to buy things like cars and equipment on an overdraft.

But that isn’t always the best way.

A far more attractive option is to use the inherent value in the assets that they own to secure their borrowing, rather than packaging them in with everything, which could mean the value of a car or piece of equipment won’t be valued at its real market value.

Specialist leasing and finance companies will see the real value of such assets and be happy to reflect the higher value as security.

Companies and fleet managers need to ask themselves the question:

- Have I already made use of my vehicles and equipment?

- Am I sitting on assets on the balance sheet that I could use to gain capital through a sale and leaseback deal?

This can work on cars, plant and equipment, printing presses, industrial equipment and so on, and can be a very valuable way of freeing up capital.

A specialist company will have information readily available to value cars.

It is possible to enter into a sale and leaseback deal for cars up to five years old at the end of the deal.

These contracts can include full servicing, maintenance and tyres in the monthly rental price, and the money given to the company by the sale of the vehicle can be used in any way it wants.

This approach is all about looking at your finances in a different way, standing back and reassessing your structures rather than doing things the same way that you always have done.

Traditional lenders tend to look most favourably at property when it comes to security on borrowing.

They view bricks and mortar as having much greater value than something like a lathe, a printing press or indeed a car.

HSBC, and other similar leasing and finance companies, have specific departments for such equipment, and will see a much greater value in them than traditional lenders.

Let’s say that you own 37 cars.

You could go to a bank and raise money as part of overall borrowing, and a traditional lender will pick up cars within the overall security package.

If those 37 cars are worth £8,000 each, that makes a total worth of £296,000.

Specialist firms such as HSBC would advance the full £296,000 on a sale and leaseback basis, but the traditional lender would advance a reduced percentage of the value of the same assets, or around £200,000.

You are immediately £90,000 better off by coming to a provider that really understands the value of the asset.

Could you be getting better mileage from your money by taking a fresh look at how you manage your assets?

Small details make a big difference:

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