 A software finance company specialises in providing finance solutions for businesses which require software. The question of IT finance is a common dilemma for any organisation which requires a high standard of service for their existing and potential customer base in the most efficient and cost effective manner. Technology changes on a rapid basis with upgrades required constantly to ensure a business remains competitive. Keeping pace with the latest technology can take up valuable resources and may distract a business from its core services. In addition, many organisations have difficulty in maintaining the necessary level of software to cater for their own growth. In all of these situations, the right software finance company can ease business challenges by taking away the burden of ensuring business technology is up-to-date and keeping costs to a minimum.
The key benefits of using a software finance company are:
Capital Conservation - Financing allows you to obtain the technology your business needs while retaining your cash and conserving your lines of credit.
Increased Purchasing Power - Financing enables you to obtain state of the art software through regular monthly payments. While the upgrades your business needs may cost hundreds of pounds, monthly payments will often only increase by a few pounds.
Technology Rotation – Many suppliers will facilitate programmes which allow you to make the transition to newer technology sooner and establish a cost-effective way to acquire, manage and retire software.
IT Finance makes good commercial sense; all companies need new technology and software to improve their efficiency and finance through a software finance company makes this all the more affordable.
The options:
Finance can be raised through one of the following:
Loan –IT finance is normally taken over three or five year terms and paid quarterly by Direct Debit. Rentals are generally fixed for the duration of the agreement and are tax allowable.
Lease – Businesses are able to lease the software they need immediately without having to pay entire costs upfront. Leasing payments are regular and have the option for upgrade as technology becomes obsolete. Leasing is a financial contract between your company and the software finance company. You will be committed to repay a given number of fixed rentals for the term of the contract, (for example 36 monthly payments of £50+vat). The supplier provides the equipment to you and is paid by the software finance company. The goods are owned by the software finance company at all times until the end of the lease when you will often have the option to buy the equipment outright. Because you are essentially renting and not buying the goods you can claim 100% tax allowance on the payment.
Choosing the Right Type of Finance
All types of financing offer different advantages and it is essential that you assess your own circumstances and requirements before committing to a specific finance contract. For example, if you
• want to own the software straight away, an outright purchase (cash or loan/overdraft) might be appropriate;
• may want to own the software at some point in time and want to take advantage of instalment payments, hire purchase might be the best option;
• do not want to own the software at all but require it for a period of time, consider a financial lease.
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