The Covid-19 crisis has put a strain on the cash flow of many companies. More than ever, SMEs and medium-sized companies need to consolidate their cash flow in order to establish a firm footing for recovery. Among the solutions to be considered, financial rental has many benefits and can be very cost-effective. Olinn explains how.
Why has the crisis had such an impact on companies' cash flow?
During the Covid-19 health crisis, many companies were faced with the partial or total cessation of their activity. The lack of liquidity (cash flow) has therefore been a major problem for these companies. At the same time, they have had to continue to pay their suppliers, repay their loans, meet their expenses, etc. The balance between inflows and outflows, and with it their cash position, has been more or less permanently weakened
As for companies that did not suffer the full impact of the crisis, this unprecedented event has forced them to find solutions to stabilise their cash flow. However, it is difficult to use traditional means, such as lengthening supplier payment terms or reducing customer payment terms, as customers and suppliers have encountered these cash flow problems themselves. For this reason, it is preferable to turn to more original solutions, such as financial rental
Financial rental: a smart solution
Financial rental is a smart solution that allows you to use equipment that is always at the cutting edge, without having to take out a loan or impact your investment capacity.
Financial rental: what are the cash flow benefits?
With financial rental, companies rent an asset for a certain period of time. The company thus enjoys the use of this asset for a period determined by a contract, in exchange for a monthly rental fee. The equipment or property is returned at the end of the contract. There is no purchase option, unlike lease-purchase agreements. Here are the various ways in which financial rental can benefit your cash flow.
Preserve your investment capacity
By paying only for the use of your equipment over the period of its availability, you preserve your investment capacity, which you can use for other purposes, such as your development. Traditional investment in equipment requires the mobilisation of large sums of money, which can weaken some companies, especially smaller ones. Financial rental is therefore an attractive alternative to traditional investment.
Control your costs thanks to a fixed rental fee
Financial rental allows you to renew your equipment while controlling your costs, without impacting your cash flow. That’s because, at the beginning of the financial lease, you know what rental fee you will pay and for how long. Cash outflows are controlled each month and adjusted to your capacities. They can be increased or decreased according to your needs!
Take advantage of integrated financial rental services
Various services are included in financial rental, including after-sales service, maintenance and equipment return. This means you can avoid unpleasant surprises in the event of a breakdown and, once again, have a clear view of your monthly cash outflow.
Avoid using cash credit
Financial rental saves you from having to resort to cash credit, which involves simply taking out a loan from the bank to give you more liquidity. The flip side of the cash credit coin: as with all bank loans, you will need to pay interest every month.
While this solution may give you some breathing space in the medium term, it is not necessarily attractive in the long term. Conversely, financial rental allows you to limit your debt levels.
Financial rental: which sectors does it work best for?
Financial rental can make sense for your cash flow, whatever your industry. It is generally suitable for sectors that require frequent equipment renewals and large investments (e.g., sectors that require top-level IT service, an extensive car fleet, mobile devices – without having to deal with equipment damage – or expensive medical equipment).
Olinn helps you finance and manage your equipment.