Magazine article New Zealand Management

TEN TOP TIPS: Tips for Business and Asset Financing

Magazine article New Zealand Management

TEN TOP TIPS: Tips for Business and Asset Financing

Article excerpt

Byline: Mike Fickling

New Zealand may be in a recession but there are steps businesses can take to protect their positions Co and even expand and thrive. Whether you are planning a purchase to drive immediate cost savings or to increase productivity, or you are thinking about a strategic investment to position your business for future success, then itCOs likely youCOll be looking into finance options.

The lending environment has changed dramatically over the past 12 months. While lenders may be tightening up their criteria, funding is still available for businesses which meet the lenderCOs criteria. Here are some points to consider when looking at finance for your business.

Co Is now the right time to buy? Goods and machinery in New Zealand are currently well priced but with the fall in the Kiwi dollar, the price of newly imported goods may rise by up to 20 percent in the short term. If you plan to purchase equipment in the next year, it may be more cost effective to buy now rather than later.

Co Can you afford it? Look at your businessCO monthly outgoings and other loan commitments to check that it can comfortably afford the repayments. Consider how revenue and expenditure may change over the short to medium term. Over the past year, interest rates have come down significantly. This may lessen the financial impact of your purchase, and make loan repayments more attractive. There are many websites that offer calculators to work this out, or talk to your accountant.

Co Fund assets in the right way Apply for the right type of loan. If you are buying an asset, it makes sense to use the asset as loan security. This leaves bank lines free for other purposes, which is particularly important in todayCOs market. If you need to ease cash flow or free up working capital faster than your overdraft can allow, then an invoice finance facility may be best for your business. Also ensure that your loan term and payments are structured correctly for your business, for example, seasonal payments or a revolving credit facility, as these may provide your business with tangible benefits such as cost savings in interest or allow you to better manage your cash flow.

Co Demonstrate the assetCOs future value New plant and equipment can help to boost productivity and increase your business outputs, while saving on repair and maintenance costs. …

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