If your business depends on regularly transporting goods and materials, then you need the right vehicle for the job. It can be tempting to attempt to save money. You might want to choose a smaller van or buy something that’s a few years old. The latter, in particular, might seem like a tempting option, as the vehicle will already have done the bulk of its depreciation.

However, both options can be a false economy. Without the right tools to get the job done, all you are doing is constraining the rate at which your business can grow. Dealing with breakdowns, repairs and emergency use of outside delivery firms adds time and cost. It also delays the speed and efficiency with which you can meet customer demands.

Finance for trucks and HGVs

There are no two ways about it, having the right vehicle, or fleet of vehicles, is essential for business growth. But given that the cost can easily run to six figures, what asset finance options are available to procure the type of wheels that your company needs?

Lease finance

Leasing has become increasingly popular over recent years, and not just for commercial vehicles. Private individuals are increasingly choosing lease over purchase for their personal cars. There are various lease deals available, some of which include all maintenance, servicing and insurance. There’s really nothing more to worry about other than filling up with fuel and getting on the road. You can also choose the duration of the lease. If you want your company to always have a gleaming truck that’s less than two years old, this is an ideal choice.

The other factor to keep in mind with leasing is that the truck or van will be categorised as a monthly expense as opposed to an owned asset. This could be beneficial from a tax perspective, so make sure you discuss it with your accountant.

Hire Purchase

Traditionally, hire purchase has been the finance option of choice, particularly for hauliers, logistics firms and other operators of multi-vehicle fleets. The key benefit here is that you can spread the overall cost over a fixed term and you don’t need to pay a hefty up-front deposit. The vehicle remains the property of the finance company until you complete the payments. In effect, you are hiring it until you have paid in full.

Using your fleet to generate funds

If you decide to purchase your vehicle, or if you already own one, you have a valuable asset that can, in itself, unlock funds when you need them most. Sale and leaseback essentially takes the hire purchase principle and turns it on its head. The lender effectively purchases your truck with a one-off payment at an agreed price, and then hires it back to you so you can continue to use it. This is a form of finance that can be used on a range of high-value assets, not just vehicles. So if your business is asset-rich but cash-poor it is well worth looking into.