Corporate Asset Finance has the ability to be very complex today – the positive news being there are a number of options for the Canadian business owner / financial manager to choose from. That might be a lease company, a bridge loan provider, or even a Canadian chartered bank. The owner/manager can then be forgiven for not truly grasping the benefits, and risks, of asset finance. Worse, more often than not available advantages and benefits are under utilized.
One way to take control of the asset finance concept is to utilize the services of a financing expert. Truth be told it is a rare breed of business owner or manager that has the background in credit, law, finance, tax , and accounting that are all part of the asset finance equation.
One way in which the asset finance question is often overlooked is simply the inability of the owner and manager to look at asset financing from a ‘cradle to grave ‘point of view
So what are those starting to end points when it comes to corporate asset finance via your lease company or other alternative financial institution? First of all the borrower has to have a strong sense of the general marketplace – that is probably one of the greatest areas of misinformation or confusion. We talk to countless clients who simply don’t understand the lay of the land when it comes to asset financing – namely who are the players in the asset arena they are playing in? We can’t count the number or times we’ve seen a client who has previously spent a lot of time dealing with the wrong players and the wrong offerings. To put it simply, they don’t understand the lay of the land!
After getting a strong handle on the overall market your firm has to have some sort of evaluation criteria. Those criteria involve rate, term, structure, useful economic life, etc. Documentation, tax and accounting issues, as boring or mundane as they might sometimes seem are critical to ‘best practices ‘in asset finance.
In entering a lease or asset finance transaction your company needs to know how this particular finance transaction can make or lose your company money. That might come from understanding applicable rate structures, or perhaps knowing your firm might have the bargaining power to issue a tender to solicit asset finance bids. The big boys and government does it – can you? Sometimes you can .Not always, but sometimes!
Key issues in accounting and finance play a key role in asset finance.
They might include depreciation policies, or simply your choice to enter into an operating off balance sheet type transaction.
Part of the business of asset finance is of course knowing the long term economic value of the assets you’re financing. Your overall financing strategy brightens significantly when you’re keenly aware of asset resale values and obsolescence issues.
Want to get a solid handle on the pros and cons of corporate asset finance in Canada, dealing with a lease company or commercial finance firm. If you don’t know it all (who does? ) seek out and speak to a trusted, credible and experienced Canadian business asset financing advisor who can assist you in getting un-overwhelmed!
Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 10 years – has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
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