What is Asset Finance and Why it Matters for Dentists
Asset finance for dentists has been viewed under various perspectives. In today's context, one can think of a dental practice as an amalgam of "equipment" and services. To remain modern and competitive, a dental practice must have access to the very latest equipment-from the most highly technical imaging systems to the most advanced dental chair. Some dentists run cosmetic procedures and services, e.g. no prep veneers. However, the bedrock for a functioning and efficient dental practice is in its efficiency and ability to deliver a wider range of services. Whereas these expensive assets pose a big challenge finance-wise, asset finance comes as a strategized and flexible way for dentists to obtain the equipment they need without shelling out huge capital sums at once. This guide will walk you through the basics of asset finance and how it can really grow your practice.
Asset finance basically involves the acquisition of equipment, technology, or assets where one does not pay out the full amount immediately but makes installments over a number of months, much similar to a bank loan. For some asset finance deals, the asset itself acts as security for the finance. This for that very reason makes it easier to obtain asset funding as opposed to a bank loan. Thus, this kind of finance works better with items of considerable cost and that are designed to last for a long time. Here, listing is some relevant examples: getting dental lasers, digital scanners, or even refurbishing the entire office. Thus, you still keep your cash flow intact because the price of the equipment is divided over a period of time, and other capital can be invested in other business activities like marketing, human capital development, or further training.
What can be Financed in a Dental Practice?
There are several popular types of asset finance for use in dentistry. The first option is a hire purchase agreement. You would be required to pay an initial deposit followed by monthly payments for the asset security; the end of the term gives you the opportunity to buy the asset for a token amount and it then belongs to you. Many dentists elect this method as they want ownership of the equipment over the longer term while building some equity within their assets. It is a simple way to ownership without putting immediate strain on finances.
The second method might be a finance lease. It is the financier that is probably giving you a lease over your equipment for a few years. While using it, you will be paying fixed lease rentals and could then return the equipment, renew the lease for a further period, or buy the asset at a price agreed upon in the lease. Finance leases are more flexible and might find favor as you may have to upgrade on a fairly regular basis. The lessor is usually responsible for any loss in value of the asset and its eventual disposal.
An operating lease is the third type of asset financing. This works much like rental agreements. You will be making the lease payments for use of the equipment and we return it when the lease period expires. You do not have an option to buy the asset at the end of the operating lease period. Operating leases are ideally suited for equipment that becomes outdated very quickly, such as computer hardware or some sorts of diagnostic equipment. It allows you to have access to the best equipment technology at any given time without having to worry about owning equipment which may become outdated at any moment. This model thus relates to usage instead of ownership and likely the most cash conscious option.
Conclusion
Considerations may include if you want the equipment to be owned outright or if your practice would benefit from a flexible upgrade approach; Your cash flow and how payments fit in with your budget. A good step in this decision would be to speak to a dental financial adviser. Your practice can finance these much-needed tools through asset finance and is thus able to survive, provide better patient care, and develop in a sustainable manner.
