Vendor
Finance
Vendor
Finance is a finance scheme offered by finance providers to
equipment suppliers who wish to offer their equipment to their
customers on a finance option as well as via traditional outright
purchase. Through being able to offer equipment on finance can
further aid a suppliers sales by making their equipment more
affordable to customers and allowing them to pay over a period
of time instead of outright. This is often attractive to a business
customer because they can budget what monthly amount they can
afford to spend to acquire the equipment they need.
Typical
equipment businesses require equipment leasing for include office
furniture, catering equipment, telecoms equipment, IT equipment,
vehicle tracking equipment, medical equipment and laptops to
name just a few examples of equipment generally financed, and
various funders will have a preference list on the type of equipment
they are happy to consider financing. Equipment leasing allows
a business to budget a monthly or quarterly cost for their equipment,
being a fixed cost product the monthly lease rentals typically
do not change and are fixed payments throughout the duration
of the lease itself. Equipment leasing is generally offered
to businesses on a Lease Rental basis, therefore the business
doesn't own the equipment as it is purely renting the equipment
from the finance house (and getting the associated tax benefits
of renting equipment) who has paid the original equipment supplier
and bought the title to the equipment.
With most equipment leasing agreements, it is the responsibility
of the equipment supplier to offer warranty and back-up for
the product, leaving the finance house to act purely as the
financier of the equipment itself. Equipment leasing also allows
a business to keep other lines of finance free, such as commercial
loans, overdrafts, etc from the bank to use at a later date
if required. Equipment leasing agreements are typically underwritten
on the strength of a company's balance sheet. The underwriters
normally look for three to four times cover based on the net
worth or shareholders funds of the busines requiring funding,
other factors the underwriters consider will be the length of
time the business has been trading, previous and current credit
history, and the general performance of the business itself.
