Many businesses put off upgrading their accounting or business management systems because of seemingly expensive upfront costs, and many do not realise there is a way around this. Of all investments, business management systems are the ones that should have long lasting value. Why spend cash on investments that should provide continuing benefits to your business for more than a decade? Owen Wynn from Southern Cross Business Finance has created a list of reasons why financing your investment is a great option.
1. Minimum impact on your business cash flows
You get a full GST input credit on the entire purchase value in your next BAS, which has a very positive impact on cash flow.
2. Maximum impact on your tax position
Most of what you will purchase can be written off very quickly or depreciated over a short period of time. Financing your new software allows you to take full advantage of the tax benefits without the need to actually spend the money first.
3. Matching Cost with Benefits
Financing allow you to better match the cash flow impact of purchasing the software and the benefits it will produce. E.g. Finance offers a true “pay as you go” solution, balancing costs with benefits.
4. Conserves Working Capital
By utilising finance, a large upfront reduction to your working capital can be avoided; working capital that can be better employed for good ideas to grow the business.
5. A Known and Fixed Cost
Finance agreements are normally written on a fixed interest rate (currently at historical lows), with the repayments being predetermined and fixed for the term of your choosing. This allows for more accurate budget forecasts.
6. No Director Guarantees
Finance can often be arranged without the need for Directors Guarantees and up-to-date financials.
There are companies out there who can help
Banks and finance companies will normally finance only recoverable assets (hardware) because their banking charter restricts the financing of non-recoverable assets. If your credit risk is good, they may include some software up to a limited value. However, there are other options out there that allow you to legally finance every single component of your purchase – hardware, software, cabling, implementation, training, subscription contracts (both current and future) and consultancy.
Note: as with all financial products, always seek the advice of your accountant.
Southern Cross Business Finance have an experienced team of brokers who will listen to your needs and arrange finance for your business quickly, competitively and easily. With access to many lenders you may find that their services will be successful where others will not.
Visit www.scbf.com.au or call Owen Wynn on (03) 8873 5111 for more information.
