A new East & Partners survey for CommBank shows that 73% of businesses are interested in transitioning recent cash-funded equipment into a sale and finance back arrangement1. That figure is consistently high across business sizes, but most pronounced for SMEs (82%).
The widespread interest in finance / leasebacks also confirms most businesses have opted to dip into their cash reserves to purchase some form of equipment outright. While that can make sense in some circumstances, it can also mean businesses have outlaid large amounts of capital up front for depreciating assets that are essentially tools of trade
This appears to be an expanding trend. Separate research from 20222 shows that over seven in ten businesses used cash to buy IT equipment to help set up their staff work from home. At the time, most were ready to consider a sell-and-leaseback approach to enhance cash flow.
Chris Moldrich, General Manager Asset Finance at CommBank, says that considering a financing arrangement on recent purchases can not only spread the costs over the effective live over equipment but can also open up access to much-needed cash.
“We’re seeing many businesses consider how to unlock cash from their existing assets to ensure they can meet their expenses and have working capital to operate and grow,” Moldrich says.
“It’s clear businesses are keen to preserve capital, so they are well placed to emerge from this point in the economic cycle.”