What is leasing?

What makes contracts of these kinds with UK Vending Ltd almost unique in the UK vending industry is that we can be both the supplier and the lessor – in other words it is we that supply you with the goods and the finance and we manage the entire package in-house thus maximising flexibility and minimising management costs.

Leasing (or Rental) is a contract between us the funder (lessor) and the end user (the lessee) for the acquisition and use of an asset and/or solution and (if included) any associated costs, such as maintenance. In some cases we look to an external funder to capitalise the agreement if it means we can thus offer you an even better service.

The lessee selects the asset required and (the lessor) buys title to the asset, usually via the supplier but sometimes direct from the end user client. If UKV is the lessor, we own the goods we in turn lease to you. If you ask us to lease goods you already own we acquire title to them from you and then make them available to you through a lease. You, the lessee then makes a series of payments (usually monthly or quarterly) to us the lessor over a defined period of years, in return for which you have the right to use the equipment. The lease term is normally set to reflect the underlying asset’s expected useful life.

The benefits to you

Conserves cash reserves – leasing enables you to secure the equipment solution most suited to your business, without making a substantial lump sum cash payment, which could be used to better effect elsewhere in the business.

Maintains credit lines for other use – acquire the solution you need without affecting other credit lines, such as loans and overdrafts. This ensures that further borrowing, if required, will be easier.

Improved cash flow - spread the cost over a number of regular payments. Payments can be set to match individual requirements, including seasonal cash flow circumstances.

Fixed payments – payments are fixed for the term of the contract, protecting your business from the effects of changing interest rates. Knowing the amount of future payments enables more accurate budgeting and cash flow projections. And because payments are fixed the true cost of leasing diminishes over time as the value of money depreciates.

Leasing versus other funding options
There are many advantages to leasing when compared with other financing alternatives.

Cash

- Outright purchase has an immediate impact on cash flow. This is not the case with leasing
- The cash is tied into the asset and cannot be used elsewhere in the business. Leasing ensures the cash is available to be used to better effect elsewhere in the business
- The asset(s) is shown on the balance sheet whereas some types of lease are off balance sheet
- Writing down allowances are only claimable each year I the UK at a 25% rate on a reducing balance basis; leasing payments are 100% offset against taxable profits
- Outright cash purchase can reduce your flexibility to upgrade and add to your equipment as technology and your business needs change as you are dependent on future cash reserves. Leasing ensures total flexibility regardless of immediately available cash reserves

Loan

- Using a loan will use up some of your available credit and impact on your ability to obtain or increase any overdraft or current loan to fund working capital in the future
- The asset(s) is shown on the balance sheet whereas some types of lease are off balance sheet
- The lender may ask for additional security – e.g. a debenture over book debt or a charge over a freehold property, where as a lease is always only ever secured on the asset in question
- Loans may be repayable on demand, whereas a lessor cannot ‘foreclose’ on the transaction whilst payments continue to be made
- Only the interest element on loans and writing down allowances are claimable against tax, whereas 100% of leasing payments may be offset against taxable profits

Overdraft

- An overdraft is a short term finance facility to fund working capital, not asset acquisition, and is therefore less appropriate for buying technology
- As with a loan an overdraft will use up some of your available credit and impact on your ability to obtain or increase an overdraft to fund working capital in the future
- Interest is normally variable and calculated daily – lease payments are fixed and allow for easier budgeting
- Just as with a loan, repayment on an overdraft is on demand. Lessors will not foreclose on the arrangement whilst the lessee continues to make payments
- The asset is shown on the balance sheet – some types of lease do not require this

Who uses leasing?

Nearly everyone! Virtually all of the FTSE 100 companies use lease finance solutions to acquire business asset solutions. Over the last twenty years leasing has grown in popularity owing to its often favourable impact on taxation and the value added services that are often provided as part of the lease, for example maintenance, extensions and upgrades, as well as associated service costs.

FAQs

Q. How do I arrange finance?
A. You can contact us directly by telephone, fax or by e-mail by using the ‘contact’ or ‘’enquiries’ forms on our website.

Q. Why should we use leasing rather than pay cash or use a loan?
A. Your cash may be better used elsewhere in the organisation, particularly as working capital helping to develop the business, rather than financing fixed assets.

Q. What kind of equipment can be financed using leasing?
A. Almost any capital equipment can be financed using leasing; from essential vending and IT and telecoms equipment, to software and electronics; from dental chairs and medical scanners to wheelie bins and snow ploughs including plastic extrusion machines and laser etching tools. Nearly any asset required to improve the efficiency of, as well as develop and grow your business can be leased, and we at UKV can both advise your use of leasing and package your requirements to include all the products you wish to lease and not only the vending equipment. Please ask us for details.

Q. What value of equipment can I finance?
A. Assets with a value from as little as £1,000 can be financed through a lease though we also offer reduced rental packages for our low cost water units.

Q. How long will my finance agreement be for?
A. There is a wide range of leasing terms available which can be tailored to suit you, so long as the term does not exceed the expected useful working life of the equipment.

Q. How often do I make payments under my finance agreement?
A. Most UKV customers choose to pay monthly or quarterly, but payment structures can be arranged to suit each individual customers’ requirements.

Q. How do I make payments to UKV?
A. Most customers choose the convenience of a direct debit arrangement or a standing order though we may consider taking payments by conventional invoicing for a small premium.

Q. When do I make my first payment to UKV?
A. This will be normally on the date on the agreement or according to the date of any acceptance certificate or installation.

Q. What happens to the equipment at the end of the finance arrangement?
A. It depends on the type of finance arrangement you choose with us. With a lease agreement you can choose either to continue leasing the equipment for a secondary period, arrange for an up-to-date replacement to be installed as part of a new agreement or simply return the equipment to us. At the end of a lease purchase agreement you have the option to buy the equipment for a final, nominal sum.

Q. If we want to add, change or replace the equipment during the lease, what happens?
A. Changes to equipment requirements can be easily accommodated by UKV via our upgrade and add-on options. A simple adjustment to your payments will make this process easy.

Q. Do the leasing payments cover the VAT element of the cost of equipment?
A. Yes, you pay VAT on the payments as they fall due, rather than pay the VAT up front in full as you would do when you purchase equipment.

Q. Who is responsible for insuring the equipment?
A. As the lessee, you are responsible for insuring the equipment against loss and damage. You should make sure that the equipment is insured with a reputable company and for the full replacement cost. You may be required to produce evidence of the insurance policy.

Q. What do I do if I want to end the finance agreement early and how much notice do you require?
A. You should inform us of your early termination request in writing and we will quote you a settlement figure based on early termination. Normally you will be required to give 90 days notice of early termination.

For further information on leasing Office Coffee Machines, Water coolers and vending machine visit

Copyright © UK Vending Ltd 1969-2009