Tips for purchasing new business assets

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This is an excerpt from Business Spectator's new short course on Financing Growth. Click here to read the rest of the article, plus the remaining nine articles in the course.

Matching the finance loan to the asset life

Is your business looking to purchase new assets?

If so, once your business has assessed and agreed on the need to purchase stock or capital equipment, it's important to ensure the finance product is structured to reflect the working life of the asset involved.
What sort of finance should I look for?

Specifically, it's crucial that the term and structure of your finance contract does not exceed the useful life of the asset being purchased when establishing a finance agreement.

For example, if you are buying a short-term asset such as stock, this should be funded with short-term financing such as an overdraft facility. On the other hand, if you are purchasing longer-term assets such as plant and equipment, it's important to put a long-term funding facility in place.

Click here to read the rest of the article, plus the remaining nine articles in the course.