Asset Finance for Vets: Surgery Sensations26th May 2017
It’s estimated that as many as 1 in 2 UK households contain at least 1 pet, speaking true that Britain really is a nation of animal lovers. Yet, with so many companion animals in our homes comes a tremendous amount of responsibility and upkeep demands. As a veterinarian, you play an essential role in ensuring that our animals are kept in tip-top condition, giving them the healthy, happy lives that they deserve. But to deliver the quality care that pet owners demand, you’ll also need to tend to your business’ needs too. Running a veterinary practice, you’ll appreciate the extent of the equipment you’ll require and the necessity for the highest quality tools on the market. After all, if your pet owners aren’t 100% confident in your ability to look after their pets they’ll take them elsewhere. Understandably, securing all the equipment your practice needs can be an issue. You might not have access to the capital required or can’t afford to remove large sums from your business’ finances. However, Asset Finance for vets can offer you all the support you need!
What is Asset Finance for vets?
Asset Finance for vets is a highly specialised finance package that allows businesses to acquire every piece of equipment they need to operate effectively. Without access to equipment such as operating tables, surgical and diagnostic equipment, dental tools and so on, how can you maintain the level of trust that pet owners have bestowed upon your business? But with this kind of finance, you can spread out these costs and avoid doing irreparable harm to your business’ finances, making this package a staple among many practice owners.
How can Asset Finance help your veterinary practice?
Asset Finance is an umbrella term that describes a diverse collection of finance products that all assist your business in different ways. But, the key benefit of asset finance for vets is the ability to spread equipment costs over a period, possibly extending as much as 7 years, minimising the strain on your finances. In addition, depending on the finance product and the equipment involved, it may also be possible to reclaim capital gains tax and VAT. But before you decide to enter any finance agreements, speak with your business accountant first.
How does Asset Finance for vets work?
Asset Finance is a fully customisable package that’s designed to help you acquire essential assets. The intention behind this finance solution is to allow you to spread equipment costs over time or allow you to unlock the cash tied up in your existing assets. By choosing to utilise Asset Finance in and around your veterinary practice you could gain access to Leasing Agreements, Hire Purchase solutions, Asset Refinance plans and much, much, more!
Leasing Agreements offer your practice an alternative solution to asset ownership, allowing you to simply acquire its use for an agreed period. Because you do not own the equipment in question, and depending on the product that you choose, the concerned asset may not appear on your practice’s balance sheet, proving exceedingly useful for tax efficiency reasons. Rental payments may attract VAT which may be reclaimable on a quarterly basis. Leasing agreements can last up to 5 years but could be extended to 7 years for highly expensive assets. But before you go any further, it’s vital that you fully understand the two types of lease that are available to your practice:
- Operating: leases are a popular method of temporarily securing the services of vital equipment in your practice in exchange for a fixed monthly rental. Such agreements are designed to cover only a portion of the asset’s working life. Plus, unless you have arranged a separate contract with the supplier, you will be responsible for maintaining the equipment. Rental costs are calculated considering the usage of the equipment throughout the contracted period and the future predicted value at the end of the contract. When the agreement ends you can either, subject to conditions, return the equipment, extend the term or upgrade to the lastest model.
- Finance: leases cover the majority of the working life of the concerned equipment. As it is with operating leases, you’re responsible for maintenance, repairs, insurance, registration, admin and so on. Again, you are leasing veterinary equipment for an agreed period in exchange for a fixed monthly rental that takes into account the term’s length and the predicted worth of the asset once the agreement expires. At the end of the term, you’re given the choice to either return the machinery or continue to lease it for a nominal annual cost, as agreed with the funder.
Hire Purchase is a great method of finance for many practice owners as it allows you to eventually become the owner of the concerned equipment. What’s so attractive about this method of finance is it that allows you to spread the asset’s total cost over a period of time, instead of forcing your practice to pay a large one-off payment. Hire Purchase solutions work by the lender purchasing the equipment on your behalf and letting your practice use it whilst you make fixed monthly repayments. However, before you can use the equipment, you must first pay the lender an ‘initial deposit.’ An initial deposit is usually equal to 10% of the equipment’s total value, however, this is negotiable and could be higher or lower depending on circumstances. In addition, the initial deposit also covers the full VAT associated with the asset, which may be reclaimed on a quarterly basis. As soon as this has been paid, you can begin using the equipment and will start the repayment process. Repayments are calculated over the length of the agreed term and incorporate both capital and interest term. At the end of the term, ownership of the asset is transferred to you providing all repayments have been made.
Asset Refinance allows you to unlock the value tied up in any of your existing and unencumbered assets, enabling you to receive a lump sum off the back of them, and is a great way to raise cash for your business without having to go to your bank. Technically a type of secured loan agreement as the funder takes security in the assets, terms can typically range up to 5 years, during which you will be required to make fixed monthly repayments. As such, should your practice fall behind in making fixed monthly repayments the finance lender can seize the assets in order to recover the remaining costs. At the end of the term and once the finance has been fully repaid, ownership of the asset is returned to you.
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