Finance For ‘Soft’ Assets Becomes More Widespread

Businesses continue to invest in ‘soft’ assets using finance, according to the latest figures. Statistics from the Finance and Leasing Association show that in the 12 months to the end of October (the last month for which figures are available) its members provided finance for £2.248 billion worth of IT equipment.

For the month of October, lending was at £195 million which was up by 22% when compared to the same month in 2016. Over the 12 month period, the stats remain stable.

And at the same time, business equipment finance grew by a rather more substantial 12% to £2,585 billion when compared to the previous 12 months.

These figures suggest that UK businesses are becoming more accustomed to using soft asset finance methods rather than using more traditional methods such as purchasing them outright.

What are ‘soft’ assets?

‘Soft’ assets can typically include IT hardware and software, security equipment and furniture and fittings – assets that are essential to the fabric of the business and key to its successful management and organisation.

What’s the difference between hard assets and soft assets?

‘Soft’ assets are those generally differentiated from ‘hard’ assets such as plant and machinery, vehicles and commercial property, but which typically have little or no resale value. ‘Soft’ assets can sometimes include intangible assets as well. This may be a brand, a specific team member’s knowledge, or cloud storage. Though many people may think that these kinds of intangible assets cannot be financed, some intangible assets can be. These are usually assets that are not physical, but are still required for the successful management of your business.

Those assets that are both tangible and intangible are becoming an increasingly important cog in modern offices where the smooth running of day to day management depends on the reliability of your communication systems, the speed of your software, and the dependability of your hardware.

Further examples of ‘soft’ assets that can be funded via finance are:

• Reprographics/Printing
• Telecoms
• Catering Equipment
• Gym & Leisure Equipment
• Garage Equipment
• Epos Equipment
• Vending
• Recycling Equipment
• Medical Equipment
• Audio Visual Equipment

Leasing computer hardware and software

As the FLA figures suggest, IT equipment is one of the most common forms of ‘soft’ asset to be financed. But while hardware finance has become relatively commonplace, particularly via leasing, software finance is rather less widespread.

This is not because software funding isn’t a viable option for businesses, but rather because many businesses are not aware that they can lease their preferred applications in the same way that they might lease PCs, printers, and other office equipment.

What are the benefits of leasing computer hardware and software?

Businesses that finance their more essential applications, rather than buy them, benefit in several distinct ways.
The principal benefit of software finance is, unsurprisingly, cost. Enterprise software can be prohibitively expensive for a small business, but it can also bring a significant competitive advantage.

A company that uses accounting software is usually better equipped to manage its finances than a company that relies on Excel spreadsheets. But benefiting from these programs will often require some kind of initial outlay. If a business can’t afford it, then it can’t take advantage of it. That’s where ‘soft’ asset finance can play a part in the procurement of useful software for your business.

With software and hardware finance, business can more easily spread payments across monthly instalments, making it easier to pay for software without compromising on quality with a lesser or older version. If the business needs to upgrade or scale, the finance agreement can be amended to meet their evolving requirements.

A finance agreement can be tailored to the exact needs of the customer and include both tangible assets, such as PCs and laptops, and intangible assets, such as support, cloud storage or communications.

Software funding is also well-suited to changes in requirements, as businesses scale up and their needs grow or change. It’s also easy to avoid the problem of built-in obsolescence that comes with software and hardware alike.

Leasing IT hardware and software allows businesses to keep pace with the latest versions, iterations, and upgrades. This means they never have to worry about their equipment or their software becoming slow or ineffective over the long term as they’re seldom very far from a high-quality replacement.

Given the pace of development, particularly with software, this is an important consideration for businesses that need access to state of the art technology to keep up with the competition.

How can ‘soft’ assets be financed?

For business where cashflow is an issue or where there is a desire to spread the cost of acquiring assets over time, asset finance is the answer to cover the cost of acquiring the required ‘soft’ assets.

With only a small payment upfront, and easy-to-manage payments on a regular basis, financing ‘soft’ assets can be a simple, cash-flow friendly solution that ensures a business has the vital tools for the job that it needs.

There are various forms of finance agreement available and the best solution will depend on the individual objectives of the business.

At Anglo Scottish Asset Finance, our aim will always be to provide the business with an asset finance solution that is most cost effective in meeting its needs and thus helping it reach its full potential. Our approach with ‘soft’ assets is no different – read more about soft asset finance.

If you would like more information on your options, then please get in touch with Anglo Scottish Asset Finance today.