Improve cash flow and boost occupancy with equipment lease rental

Read Time: 3 minutes

Lease rental agreements make it so much easier to upgrade your old care equipment. Rather than large upfront costs, payments are made at regular intervals (monthly/quarterly) during the lease rental period.

Why lease rental?

That sinking feeling when the forkful of dinner that just entered your mouth is way too big. With minutes of painful chewing and the ever-present urge to spit the lot out... its a feeling we can all associate with, and is a sensation that is not all too dissimilar to the occasional experience when purchasing care equipment.

Does that upfront expense required when buying equipment outright ever feel like a little more than you can chew? The large expense that is inevitable with new equipment is often a risk that puts us off biting the bullet, namely the adverse effect it can have on cash flow.

However there is an alternative way to acquire new equipment. Lease rental agreements allow the total amount of an equipment purchase to be broken up into regular instalments, ensuring manageable individual payments, spread over a longer period of time, maintain a healthy cash flow.

Lease renting equipment has several benefits:

  • Improve cash flow due to low monthly cost
  • Get the care equipment you need, when you need it
  • 100% Tax deductable against profits
  • Option to purchase at end of lease agreement for nominal amount

Lease rental boosts occupancy levels

Lease rentals can result in increased or secured revenue by ensuring bedrooms contain serviceable beds for residents. Let's build a little scenario, taking beds for instance. A care home needs 10 new nursing beds to replace end-of-life beds, but buying these outright is unaffordable meaning they end up buying just 5.

However, by leasing all 10 beds, the care home can work within their budgetary or cash-flow restrictions, meaning they can now kit out the care home with all 10 beds. This increases the number of beds for new admissions, giving an increase of 5 fee paying residents. This increased revenue makes leasing very attractive.

Lease rentals are tax deductible

All lease payments are 100% tax deductible as a business expense.

Example: A care home buys 10 Opera® Eco pofiling beds. The outright cost including VAT would be £5980. By making monthly lease payments of £201.65 over 3 years, and assuming a company tax rate of 21%, the care home would qualify for £1,451.85 of tax relief over the 3 years. The tax relief more than covers the cost of the credit, exceeding it by £4.79 a month.

In instances where no or little tax can be relieved, leasing actually becomes a more cost effective way of replenishing care equipment as well as aiding cash flow.

What happens at the end of the lease rental period?

At the end of the lease rental period, the equipment can be purchased for a nominal amount. Alternatively, a new agreement can be made and the existing equipment can be replaced with new equipment.

Do I qualify for lease rental?

A lease rental agreement is open to all limited companies.

How can I take advantage of lease rental?

Give us a call. A member of our equipment advisory team will calculate a lease agreement based on your enquiry. If you are happy with the agreement, a contract is entered into, and the lease period begins...

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