Asset Finance Success Story: Saving a scaffolder £15,000Published on 8th September 2020 2020-09-08T11:00:00+00:00 - Last update on 13th September 2020 2020-09-13T11:43:39+00:00
Getting the right equipment you need to do a job is vital - but so is getting it at the right price. At Rangewell, we can help ensure that you don’t pay more than you need to for the kit you need - even if you have already bought it.
TL:DR - When a scaffolding company found that their existing vehicle finance was potentially going to cause them issues during the downturn in 2020, they needed a solution. Rangewell was able to find them an Asset Refinance deal which reduced their monthly payments from £18,000 per month to just £3000 per month, at just 5.5% with 5 years to repay.
“If you are in the scaffolding business, you need to stay competitive - there are a lot of other firms out there just as capable of putting up pipe. So you have to watch every penny you spend - because it all comes out of your profits.
That's true at any time - but right now watching the spending is more important than ever. “
In scaffolding, as in every other business, cash flow is crucial. If you're spending more than you are bringing in, you have a problem that could easily bring your business down. At Rangewell, we have found that there are many businesses now facing cashflow problems because of the downturn, and the financial arrangements they made in previous years when business was booming are becoming a problem now.
We were recently approached by a scaffolding business in the north of England. They had been established for more than 20 years and had built up the business from the original two partners with a lorry full of secondhand gear into a thriving business. They now have eight lorries, a skilled permanent team as well as contractors, and work with businesses of all kinds, from small builders to local authorities across the region.
“We are not exactly living from hand to mouth right now, but business could be better, and nobody knows how long it will take for the world to get back to work and start building again. We needed to tighten our belts.”
The downturn has meant that business slowed down, with fewer new projects started and less need for scaffold. Cashflow was reduced, but with casual workers and furlough, the usual problems of staff wages were not the problem. The issue was the finance for the fleet of eight scaffold lorries the business operated.
“When I went through the figures with the accountant, I saw that our wagons were our biggest drain. We had paid around £200,000 for them altogether and I had arranged what I thought was a reasonable finance agreement at the time to buy them in - but it meant that we were paying out £18,000 a month for vehicle finance.”
From £18,000 to £3000 a month for vehicle finance
The partners realised that the ongoing cost commitment was a threat to the business and approached us at Rangewell to see if there was any way to reduce the monthly repayments.
Buying any type of business equipment or vehicles can mean a major capital investment. Most businesses will want to finance the deal and call on a lender to provide the funding they need.
In most cases, Asset Finance can offer the most cost-effective solution - certainly more cost-effective than a straightforward business loan.
This is because, with Asset Finance, lending is secured on the equipment or asset itself. This security means that if there is a problem and the borrower cannot make the repayments, the lender will simply repossess the asset and sell it to recover their funds.
This can make Asset Finance agreements much more competitive than other types of funding. The cost of all lending is based on risk, and a reduced risk means the lender's costs are reduced - which in turn means that they can pass on the savings to you with a lower rate.
With Asset Finance, not only is there no risk to your other business assets, the rate you are charged and your monthly repayments can both be lower.
Asset Finance covers a number of funding arrangements:
Hire Purchase – spreading the cost of buying
Hire Purchase - or HP - spreads the cost of buying your equipment. Technically, it lets you hire an asset - such as a lorry - until you have paid for it in full.
You pay a deposit plus fixed monthly instalments for the agreed term, which commonly lasts between 12 and 72 months. HP is the ideal solution for durable equipment you‘ll want to keep for long-term service.
Leases - removing the capital cost
Leasing can provide the equipment you need without the cost or commitment of buying it - or of any upfront costs.
Leases work like rental agreements. You pay a monthly rental charge to use the asset, although it will never become yours. Maintenance, repairs, and registration can be the responsibility of the leasing company.
But remember - although Asset Finance is generally a cheaper way to raise money to buy equipment and vehicles, not all Asset Finance deals, and not all lenders are created equal. The wrong deal could mean paying much more than you need to for the equipment you want.
We looked at the figures ad saw that our client was paying more each month than he needed to - and that we could save him money by arranging Asset Refinance.
What is Asset Refinance?
If you are currently paying for your business equipment under a finance arrangement, you may be able to reduce the cost by refinancing.
At Rangewell we can look at your existing deal and arrange refinance - a way of paying off your existing finance, by replacing your current deal with finance from another lender, and a more competitive rate.
It could mean cutting your monthly outgoings substantially.
This is known as Asset Refinance. Replacing an existing finance deal with a better alternative - one that offers lower rates, or which can be over a longer term to spread the repayments over more months - can cut your monthly commitments and help you deal with cashflow problems.
It is particularly effective at present, as low interest rates mean that borrowing can be much cheaper than you might have imagined. But the benefits don’t stop there.
Asset Refinance can help you raise money - in effect, releasing the investment you have already made in your existing kit. By using your existing assets as the security for a new loan, you can receive a cash lump sum which you will repay, again by using a straightforward Asset Finance deal. Plus you can continue to use the assets while you are repaying the lender.
Ready to find out more about Asset Refinance? Contact us now.
In the case of our scaffolding client, we saw that the savings were dramatic. We found another lender who could offer a much more attractive rate, and who could spread payments over an additional three years. The monthly repayments went from £18,000 a month to just £3,000.
Repayments fell from £18,000 a month to just £3,000.
“I called Rangewell to see if they could save me some money each month. They saved me £15,000 each month - and that was a saving that was well worth having.”
How we were able to help
We work with all the lenders in the UK market, and not only do we know which are most suitable for a particular type of deal or a particular sector, we know those that can offer the most cost-effective solution.
We were able to secure the funding required at just 5.5% over five years.
- £20,000 at 5.5% with 5 years to repay
Getting the right deal for your business
Refinancing your equipment can help you take advantage of current low rates - and save money each month - and, at Rangewell, we can help.
Our service is easy to use - and lets you talk to a construction funding expert to get a solution that is planned around your business needs - from scaffolding businesses to engineering and property development.We can call on our network of lenders, which includes virtually every name in the UK market to get the funds you need quickly.
Just call us and one of our experts will be able to discuss the options, and work out the most cost-effective ways to provide the funding you want - whatever the challenge your business plans present. And, in most cases, our services are absolutely free.
Equipping your business costs less with help from Rangewell
- Asset Finance expertise - for all types of asset
- Individual arrangements tailored to your circumstances
- Adverse Credit – no problem
- Repayments geared to your turnover
- Understanding the funding challenges for your sector
- Personal service
Talk to Rangewell – the business finance experts
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