5 Reasons why leasing new farm machinery might work for you
In our latest ‘In the Know’ article, Deputy Head of Rural & Head of Strutt & Parker’s Financial Brokerage arm, Karl McConville laid out ways in which farms and estates businesses can improve their financial management. Karl gave several pieces of sage advice from producing clear business plans to challenging renewal quotes.
One of Karl’s points surrounded borrowing not being a bad thing and when businesses borrow to take advantage of short-term opportunities, this can help achieve long-term profitability. As a follow-up to Karl’s blog, we spoke to our colleagues in the wider group at BNP Paribas Leasing Solutions to talk about asset finance and why you might turn to leasing for your farm machinery.
Here’s what Andy Milsom, Head of Training and Development at BNP Paribas Leasing Solutions had to say:
Leasing and asset finance represent a very popular method of acquiring farm machinery, here are five reasons why this is the case:
1. Leasing farm machinery is good for cash-flow:
First and foremost, acquiring use of expensive capital equipment by way of relatively small payment instalments is greatly beneficial so far as cash-flow and budget planning is concerned. It also makes upgrading to new equipment somewhat easier than would be the case with outright purchase.
2. Fixed payments aren’t affected by inflation and interest rate changes:
Payments, once agreed, are fixed for the duration of any finance agreement which provides a hedge against inflation and changes in future interest rates.
3. There are plenty of options available:
Different types of finance agreements are available depending on whether a user wants to own the equipment at the end of an agreement (hire-purchase) or simply the cheapest monthly cost for an agreed period of use (contract hire).
4. Payment plans can be made to suit your business:
Most users opt for regular monthly or quarterly payments when negotiating asset finance agreements, however where income is subject to seasonal but predictable fluctuation, as is the case with certain types of farming, bespoke payment profiles can be made available.
5. Asset finance agreements are tax efficient:
All asset finance agreements can be offset against tax for any tax-paying user, this includes the recently introduced and highly attractive capital allowance schemes for equipment subject to hire-purchase.
If you are looking to improve financial resilience, Strutt & Parker’s team of Rural Advisors can assist, whether that be carrying out strategic reviews to give you an objective appraisal of your current position, working with you to draw together budgets and business plans or acting as an independent sounding board to your new business ideas.
If you need any interested in acquiring new farm machinery and would like to find out more then do reach out to the team at BNP Paribas Leasing Solutions.
