When it comes to business finance, it is easy to fall into the trap of using conventional finance to manage day to day cash flow needs and expenditures. However, there are many reasons why you should consider hire purchase singapore option. For instance, hire purchase provides you with a stable and predictable monthly income stream, allowing you to protect your own capital and other credit lines. By having this predictable income stream, you are able to better plan your monthly cash needs, and utilize your available working capital quickly and easily to generate long term growth plans for your business. In addition to providing a reliable and consistent source of cash, a hire-purchase solution also provides a number of suggestions that can help you improve cash flow management practices throughout your company.
One of the most effective and simplest hire purchase solutions is to take advantage of asset finance. Asset finance typically refers to the utilization of existing financial instruments (such as accounts receivable or accounts payable) in order to finance the acquisition of new tangible assets. One of the benefits of using an asset finance strategy is that you typically only have to enter into a loan with one lender. Additionally, because most of the costs associated with purchasing tangible assets fall on the end capital partner – the company that makes the purchase – the working capital provider receives less interest and fees than it might receive if it financed the purchase directly.
Another one of the hire-purchase solutions that can be used to improve cash flow management is to make purchases from a seller that generates a fixed monthly payment to your company. In many cases, the seller’s taxable profit will exceed the total value of the assets that they are financing. By offering the seller a fixed monthly payment on a regular schedule, you will ensure that the seller receives the total profit of the transaction, which they can then distribute to their investors. This will help to ensure that your company continues to make a profit at a steady pace.
