The coronavirus pandemic has tested businesses’ operational resilience, highlighting areas where there is still work to be done as firms try to build further resilience in case of future emergencies and interruptions.
With the government warning that another novel pandemic remains a “realistic possibility” before 2030, now is the time to build in that resilience and future-proof your engineering business as much as possible.
According to EngineeringUK, at the height of lockdown 24% of businesses in the sector had temporarily stopped trading, while 45% of firms saw their turnover drop by at least a half.
Cash flow is an issue for these businesses, which will have led them to dip into their retained earnings just to keep afloat or apply for external finance – for instance, one of the government-backed schemes.
However, moving forward, with resilience in mind, firms should look for ways to keep money in the bank and spread costs where possible.
Asset finance does this
Asset finance provides funding for most equipment without the need for a large cash outlay, preserving other lines of credit such as commercial loans and overdrafts.
There are very few stipulations around what equipment you may acquire. The only difference is the finance company buys the assets and you rent them back.
Your capital and interest payments are agreed and fixed with the asset finance provider at the beginning of the contract, so you know exactly where you stand. Your cash flow forecast will be much more accurate for knowing exactly how much you will be spending on new equipment each month.
With more money in the bank, you will be strengthening your financial resilience should another unexpected fall in income occur. It will also mean you have more funds to accelerate growth when the economy allows.
Shire Leasing will help you to find the most suitable financial product for your engineering business. We have solutions for both established businesses and new start-ups, which can often be offset against pre-tax profits.
So, in anticipation of things returning to normal, make sure you’re building financial resilience in case of another ‘rainy day’. Speak to Shire Leasing about your options. Supported by the British Business Bank, we are committed to supporting British businesses and have helped over 60,000 customers since 1990. Contact us today.