Sale and leaseback (often referred to as just ‘leaseback’) is a finance option where a company sells their assets to a financier, such as Close Brothers, and then leases them back at a fixed monthly rate.
This type of solution can quickly improve cash flow for businesses, while allowing them to continue using the vehicles and machinery they need.
Here are six ways sale and leaseback could help your business:
Instant cash injection
Selling your fleet of vehicles could immediately release equity locked up in valuable assets. This makes it a fast way to increase access to funds, without having to take out a loan or interrupting access to vital equipment.
Fixed monthly costs
A sale and leaseback solution provides a predictable monthly rental fee and could make it easier to budget effectively. With a long-term finance agreement in place, your business can manage outgoings and plan strategically for the future.
Uninterrupted fleet access
A sale and leaseback scheme allows your business to carry on trading as usual because you still have full access to the fleet of vehicles, just without the pressures of ownership.
Improved balance sheet
Selling your vehicles means they will no longer appear as assets on your balance sheet, which could potentially decrease debt and tax liability. For this reason, sale and leaseback is common among companies with high-cost fixed assets.
Reduced financial risk
The value of many operational assets, particularly vehicles, depreciates over time. If you no longer have ownership of your fleet, your company will not lose money from its decreased residual value.
Flexibility and support
It is estimated that vehicle breakdowns, accidents and driver downtime cost SMEs an average of £6,000 per year. This can have a significant impact on a firm’s cash flow due to maintenance costs and can limit operations if vehicles are out of action.
With Close Brothers’ sale and leaseback option, you can add any or all of our modular fleet management services, such as 24/7 breakdown support, so you can be confident your fleet is well maintained.