Cash flow is a major concern when you’re embarking on an office fit out in London. Traditionally you might finance your fit-out with a capital purchase, but this has obvious disadvantages…
1. Paying out of capital reserves ties up capital in assets that tend to depreciate quickly, which leaves your cash flow vulnerable.
2. Using a bank loan or an existing line of credit compromises future working capital.
Both options can limit the budget and restrict the scope or quality of the fit out. But there is an alternative…
Have you considered Leasing?
It comes as a surprise to many that you don’t have to use cash or bank lines of credit to fund your office fit out. Leasing allows you to ‘rent’ your fit out and spread the cost based on a fixed budget, which can help you to plan your budget around regular monthly outgoings.
Besides the clear advantage in terms of cash flow, finance leases are extremely tax efficient too. Due to legislative restrictions, HMRC may only allow you to claim capital allowances against 65-80% of the fit-out project. However, lease repayments are 100% allowable against taxable profits.
This makes leasing the most tax efficient method of financing an office fit out.
Leasing facilities are generally available for everything from telecoms equipment through to office furniture – even software can be leased through specialist providers. In many cases, an entire Category B fit-out including labour and tertiary costs can be wrapped into one finance package.
Leasing isn’t right for everyone, but for a sizeable proportion of businesses, the advantages are compelling. Make sure you don’t leave cash on the table by choosing a fit-out contractor that can offer you a cost-effective alternative to using cash.
Leasing is just one of the areas you need to be aware of when you embark on an office fit out or refurbishment project. You can read about the others in our whitepaper: ‘How Working with a Traditional Design and Build Firm Could Cost You Thousands’.
We’re proud of our 100% record of delivering customer satisfaction. We always provide our clients with a highly detailed strategy that comes from years of experience in fitting out offices in London, including where leasing is an option to ease your cash flow and tax burden.
We know all the tips, tricks and grey areas to peak into so everyone gets what they need. Make sure you consider all the options before you buy.