At Maia Financial, we are always looking for ways our clients can use their critical assets to raise new forms of finance. The end result is access to cash which can be re-invested into your business.
This is particularly pertinent during the COVID-19 pandemic where many businesses have had to rely on cash reserves to support operations – but found there may be insufficient cash in reserve. Thus, finding ways to free up cash has never been more relevant.
Recouping capital costs
Access to new avenues of funding for many businesses can be difficult in a normal operating environment. Enter the corona-virus and there’s an added dimension of challenge.
It’s likely that there are some assets in the organisation that were paid for in cash – usually that would have included the equipment and associated soft costs. If these assets were delivered within the last 90 days, the cash paid for that equipment would be best utilised elsewhere in the business, and a rental or finance structure would make more sense for the equipment now, then a sale and rent back agreement is something to consider.
Sale and rent back agreement
A sale and rent back transfers ownership of an asset to the lessor and establishes a regular payment structure to use the asset. It can be structured using a rental, operating lease or finance lease. The transfer of ownership provides a cash injection for the business and establishes payments over the agreement period. So you remain in possession of the asset AND you’ll have capital freed up to take advantage of new opportunities.
In essence, Maia Financial is able to purchase all, or a portion of, your business-critical assets that you paid cash for and had delivered in the last 90 days, and lease them back to you. This enables you to smooth cash flow by agreeing to set payments over a specified period, and you can incorporate servicing and disposal costs into the agreed cash outlays.
At the end of the agreement, you have the option to return the equipment, upgrade the equipment or extend the agreement.
How much can you recoup?
No amount is potentially too small. The cash injection from Maia Financial can be used by your organisation to fund other critical or ongoing expenditure.
For instance, Maia Financial recently enabled a healthcare client to free up over $700,000 in cash. The client had a number of invoices to pay for a number of pieces of endoscopic examination equipment. The client paid the supplier cash for each invoice and once all equipment had been delivered, Maia Financial reimbursed the client for the total amount upon completion.
If your organisation has had to make fast purchasing decisions in the last 90 days and used your cash to pay for new assets, it may pay to get in touch and see if we can help you to release that cash and set up a post-purchase finance structure instead.
The Maia Financial team is available to chat live on our website www.maiafinancial.com.au or you can call one of our Directors on 1300 134 214.