The outright purchase of essential equipment has become even more difficult, restricting reseller opportunities, according to the distributor where a dedicated financial services team offers extensive funding expertise. Schools have to consider alternative methods of payment and Nimans is reporting a big rise in operational leasing – the only viable solution for many Local Authority funded establishments.
“Under guidelines set out by the Department for Education the method by which schools are funded determines the type of capital outlay or lease they should always sign up to,” says Nimans’ Dealer Sales Director, Tom Maxwell. “For example Local Authority funded schools, and academies (funded separately) are not permitted to borrow on grant monies received; the only third party lease available to schools funded this way is an Operating Lease. This is where the end user only pays back 90% of the value of the lease in their rentals - so someone has to take a residual value risk, which makes the lease cheaper.”
Nimans’ Leasing division offers a dedicated operating solution for the education sector to enable cost effective rental from three to seven years – a vital tool in helping resellers capture more business.
“With a 100% acceptance for local authority schools, this facility is proving very popular with the channel and education authorities who are finding regular funding difficult,” Tom pointed out.
Operating lease benefits include: fixed costs, cash flow boost, flexible repayments, fixed or variable interest options and tax efficiencies where VAT is reclaimable on the rentals, while payments can normally be offset against taxable profit.
Tom explained: “We build in a residual value that reduces monthly payments. This type of commercial leasing instantly aids cash flow and makes 'off-balance sheet' funding possible. In effect, resellers can match fixed rentals to customer income - particularly helpful for seasonal operations, including deferred payments to assist with early installation.”