Leasing assets can be a smart choice for SMEs, especially in a challenging economic climate. Of the UK businesses already using leasing, 80% say it helps them budget better, avoids tying up capital and helps manage cash flow, according to a 2023 GRENKE report. For companies with 50-99 employees, 23.5% of profitability is attributed to leasing, thanks to improved access to equipment and budget control. Additionally, leasing contributes £1 billion annually to the UK’s economy and supports 15,400 jobs. SMEs, however, need more education about leasing to close the gap between consideration and adoption.
Why Leasing is a Smart Move for SMEs
In the UK, small and medium-sized enterprises (SMEs) are increasingly embracing leasing as an attractive alternative to outright purchasing. With high inflation and economic uncertainty, leasing enables companies to optimise cash flow, access cutting-edge equipment and future-proof their operations without massive upfront investments. Here’s why leasing can be a game-changer for SMEs:
1. Preserving Cash Flow
SMEs often operate with tighter budgets than larger organisations, making it critical to manage liquidity effectively. Leasing allows companies to acquire necessary equipment without depleting capital reserves. Instead of a hefty one-off payment, businesses make regular, predictable payments, freeing up funds to invest in other strategic areas, such as marketing, staffing, or technology.
2. Boosting Productivity and Efficiency
For SMEs, leasing provides access to modern equipment and technology that may otherwise be out of reach. GRENKE’s research found that businesses employing 10-49 people attribute 20% of their productivity improvements to leasing. This efficiency boost is crucial in today’s competitive environment, allowing companies to stay nimble and responsive to market changes.
3. Driving Profitability
Larger SMEs, particularly those with 50-99 employees, report that leasing has a direct impact on profitability. On average, 23.5% of their profits can be traced back to their leasing arrangements, demonstrating that this approach not only supports operational efficiency but also enhances the bottom line.
4. Contributing to Economic Growth
The benefits of leasing extend beyond individual businesses. Leasing by SMEs contributes around £1 billion annually to the UK’s Gross Value Add (GVA). This figure highlights the macroeconomic impact of leasing, including the creation of approximately 15,400 jobs across key sectors.
5. Bridging the Knowledge Gap
Despite the advantages, only 4% of SMEs currently use leasing, although 66% have considered it, according to GRENKE’s research. The primary barriers include a lack of awareness and difficulty navigating the application process. SMEs need greater clarity on leasing options, terms and rates to fully appreciate its potential. Increased education and transparency in leasing arrangements could bridge this gap, making it a more popular and accessible option for businesses looking to thrive in challenging times.
For SMEs, leasing offers a flexible and financially viable way to access critical equipment while maintaining liquidity. With the added benefits of improved productivity, profitability and economic contribution, leasing can be a pivotal strategy for businesses aiming to grow and adapt in today’s uncertain market.
For access to flexible technology equipment leasing options, speak to Key Digital’s financial services team to apply. Call 01282 479466 or email info@key-digital.co.uk. Or fill in the contact form here and a member of the team will get back to you: key-digital.co.uk/contact