Business Finance

Finance Products

Hire Purchase

Hire Purchase is a straight forward finance arrangement where you pay for an asset in monthly installments, generally over a fixed period of 24 – 60 months, with a fixed interest rate. The VAT element of Purchase Price in paid upfront by you, along with any deposit you may also be putting in. You will re-claim the VAT element in your quarterly / monthly repayment.

Sometimes there may be a nominal fee / option to purchase fee at the end of the agreement, but this amount is generally modest and always known at the point of signing any documentation. With Hire Purchase, the asset stays on your balance sheet, the monthly repayments do not attract VAT and any interest charges can be offset against profits for taxation.


Finance Lease is different to Hire Purchase. Initially when the asset is purchased, you will only pay the VAT element on the deposit / initial rental that you put down. The finance provider will pay the remainder of the VAT on the purchase price. Your monthly repayments are for a fixed period and generally a fixed rate. However, your monthly repayments will attract VAT, which is reclaimable.

At the end of the ‘primary period’, you have various options:

  • Sell the goods to an independent third party and will be offered the majority of the sale proceeds
  • Enter into a Secondary Rental Period
  • Return the asset to the finance company.

Factoring & Invoice Discounting

Invoice discounting is a form of short-term borrowing which is often used to improve a company’s working capital and cash flow. It allows your business to raise finance from the unpaid invoices owed to you rather than using traditional bank funding.

How does Invoice Discounting work?

  • You deliver goods or provide services to your client
  • You invoice your client and notify the invoice discounter
  • The discounter advances you the pre-agreed % value of the invoice - normally the next day
  • Upon invoice payment, the discounter pays you the balance of the invoice after deducting their fees

Reasons for Factoring & Invoice Discounting:

  • Provides immediate working capital
  • Generally more cost effective than loans / overdrafts
  • Improves cash flow
  • No lengthy contracts
  • Saves time chasing invoices
  • Reduces the risk from bad debt

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