Investing in your business
It's important for both new and established businesses to be able to access a variety of funding solutions to support their ambitions. Managing your assets effectively can help you to take advantage of their value and provide flexibility to help grow your business and protect your cash resources.
Why assets are important to your business
In order for your business to grow, it's likely that you will need to make a significant investment in new assets. Ensuring there is sufficient cash to cover expenditure is one thing businesses need to manage, but finding the funds to make a much needed purchase is another.
Tangible assets add value to your business because they can help you to secure finance, as and when you need it.
Identifying your assets
You can use your assets to provide financially stability for your business. To identify your opportunities, look at your balance sheet for any assets that have high value, because they can be sold or leased.
These generally include:
- Office equipment
Valuing your assets
The true value of an asset is what someone will pay for it. When valuing your tangible assets start with the net book value (NBV), which is the value of the assets stated in the accounts.
You should then rework the NBV figure for your main assets as you will need to take into account economic realities such as:
- Property or other fixed assets which have changed in value
- Bad debts to the business
- Machinery and equipment that has depreciated over time due to wear and tear
- Old assets or stock which would have to be sold at a discount
How you can use your assets to source funding
To buy all of your equipment outright can be a costly exercise. By using the assets you have, you can take the strain off your cashflow and pay a set monthly amount.
Using Asset Finance as a way to fund your growth means that this becomes a business expense that can be written off against your taxable profits, meaning a reduced tax bill.
Asset Finance can be used for a variety of reasons, including buying new or used assets or to refinance the assets your business already owns to release funds. The advantages are that payments are more manageable, making investment more affordable with less impact on cashflow.