Services

Value of Business Assets at Historical Highs

There is a transition happening in business, where baby boomers are reaching retirement age and can either:

• Sell their business to a competitor
• Sell part or all of their interest to key employees
• Undertake formal succession to the next generation

With the value of equipment currently at historical highs, it is the perfect time for business owners in this situation to seek formal sworn valuation of their equipment and potentially raise an asset revaluation to strengthen their balance sheet.

In this blog, we explore these elements in greater detail, however we would like to note that this should not be taken as financial or tax advice and in every instance business owners should speak to their tax accountant or corporate advisor before taking any action.

Baby boomers retirement surge

We are well and truly in the midst of the transitioning of baby boomers reaching retirement age, with 2021-2027 representing the peak years of the Australian baby-boom retirement surge.

The number of people reaching the “retirement age” of 65+ in Australia has increased over time, with only 40,000 reaching 65 in the 1990’s versus 126,000 in 2021. But the peak isn’t expected until 2026, where 137,000 baby boomers will reach retirement age. See more details in the graph below.

Boomer’s retirement mountain: net annual change in Australian population 65+, 1966-2066

Image source: Firstlinks

With more baby boomers reaching retirement age, we should expect to see this reflected in business, with business owners either:

• Selling their business to a competitor;
• Selling part or all of their interest to key employees; or
• Undertaking formal succession to the next generation.

Value of equipment at historical highs

The value of used equipment has been stimulated by the ongoing effects of COVID.

According to Pickles, auction clearance rates of used transport equipment (including prime movers, line haul trailers and Japanese trucks) are at a 10 year high and have been for 12 months.

On top of this, used earthmoving and construction equipment “has lifted some 20% just this year”.

A sales example provided by Pickles is a 2016 Case 13 tonne excavator that sold for $80,000 pre COVID, sold for $116,000 in March 2022.

The value of business equipment can change on a regular basis, depending on what is happening in the world and how these events impact the market. Some of the factors which have caused the current increase in equipment value include:

OEM Supply Chain Issues

The market demand is increasing but this demand is unable to be met due to OEM supply chain issues. In some cases, there is up to a 12 month wait for equipment to arrive.

Part and Components

A lack in parts and componentry is the leading issue to supply.

Low Used Stock Availability

Due to supply issues, many businesses are holding onto their equipment once the lease ends, so there are fewer used equipment options available.

Desirability of Assets

Due to the lack of supply, business assets are highly sought after, hence businesses are willing to pay more for used equipment than they were previously, as explored by Pickles.

Import Prices

According to the Australia Bureau of Statistics, “Australia’s import prices rose by 5.1 percent quarter-on-quarter in Q1 of 2022, after a 5.8 percent gain in Q4 which was the steepest pace since Q4 2008. The latest figure represented the fifth straight quarter of growth in import prices, amid a further recovery in the economy from the COVID-19 crisis and soaring energy prices.”

Australia Import Prices Jul 2019 – Feb 2022

Image source: Trading Economics/ABS

Accounting for changes in market value of business assets

With the value of equipment at historical highs, business owners, whether retiring or not, should look into seeking formal sworn valuation of their equipment and potentially raise an asset revaluation.

There are two methods used to account for changes in the value of a business’s fixed assets.

Cost Model

The cost model is one of the most straightforward accounting approaches. This method accounts for a company’s fixed assets by carrying them at their historical costs, minus any accumulated depreciation or impairment losses over time as well.

Revaluation Model

The revaluation method is where the carrying value of a fixed asset can either increase or decrease depending on the market value of it. This helps to present a more accurate financial picture of a business when compared to the Cost Model.

Please note: In every instance, business owners should speak to their tax accountant or corporate advisor before taking any action.

Benefits of knowing the market value of business assets

Knowing the market value of your business equipment comes with many benefits including:

• Strengthen your balance sheet
• Could be used as equity to leverage off for the banks
• Could be used to raid funds to buy-out a retiring director
• Plus more.

Secure your future plan with Ledge

If you are a business owner reaching retirement and want to know your options, please contact your Ledge Finance Executive. We work with a number of exceptional business advisors who can help to ensure a smooth transition to retirement. Alternatively, if you already have a tax consultant, business advisor or the like, we can work alongside them to reach an ideal outcome.

Give us a call on (08) 6318 2777, or fill in an online enquiry form, and we will get back to you as soon as possible.

Please note the information provided here is general in nature and does not constitute financial, tax or other professional advice. You should consider whether the information is appropriate for your needs and seek professional advice prior to making any decisions.

Business Financing

Finance Solutions for All Your Business Needs

Ledge Finance have been providing customised business financing solutions to clients in Perth and across Australia for over 40 years.

With reliable solutions, competitive rates and an unmatched commitment to customer service, we have become one of the most trusted finance business partners in Western Australia.

Our primary focus is assisting with corporate, commercial and small business finance. This incorporates a number of different needs for a business, whether it is working capital finance, business asset finance, finance for acquisition or expansion, insurance premium funding, or equipment finance. It also includes short-term business finance, as well as long-term financing strategies. In simple terms – any debt that is associated with a business is where Ledge can help.

In order to assist you with your debt or finance requirement, our business finance specialists will firstly need to gain a deeper understanding of your vision and goals, the business itself, its current position and the future strategy. Want to speak to a Ledge Finance Executive about your business finance?

We do this by performing a detailed analysis of the business, looking at the internal systems and processes. Once the analysis is complete, we provide business finance solutions that fit the organisation’s specific needs and requirements.

Ledge’s complete suite of business and commercial finance products include:

• SME, Commercial and Corporate Lending
• Insurance Premium Funding
• Cash Flow Finance
• Surety Bonds
• Funding of Significant Change in Business
• Banking Facilities; and
• Commercial Property

To learn more about our complete range of business and commercial finance products, contact us here.

SME, Corporate & Commercial Loans

At Ledge, we facilitate a broad range of lending solutions for a range of clients.

Please visit our ‘Business Loans’ page for more information on how we can assist you.

Insurance Premium Funding

We provide a range of insurance premium funding solutions to clients across Australia.

Please visit our ‘Insurance Premium Funding’ page for more information on how we can assist you.

Cash Flow Finance

When it comes to growing your business, there are many challenges along the way and managing your cash flow is one of them.

Creating compelling, value adding products and services and funding stocks and supplies are just a few of the issues you may face, and we understand that banks are often unable to provide finance solutions that meet your business’s growth needs.

There are facilities available to support these growth strategies, including cash flow finance/debtor funding solutions.

Our business finance brokers based in Perth will be able to explain how you can easily manage your cash flow through varying cash flow finance solutions that suit your business’s needs.

Get in touch to see how you can easily manage your cash flow through varying solutions that suit your business’s needs.

Surety Bonds

A Surety Bond is a viable alternative to bank guarantees or level of credit, which is alternatively improving the level of liquidity of your business by freeing up bank lines for other possible banking requirements.

Having a Surety Bond doesn’t just free up capital, it frees up security and uses the business’s balance sheet strength, as opposed to property equity or dollar-for-dollar cash.

Most businesses that require a bond or bank guarantee are mainly those in the contracting industry, but the product can be used in a number of industries, including:

• Construction
• Engineering
• Energy
• Project finance deals
• Infrastructure
• Telecommunications
• Support Services
• Transportation
• All other sectors with a bond requirement (other than financial guarantee)

If you don’t want to tie up equity or cash which could be used in the business, talk to us to see if you qualify for a surety bond. It is a great product to help growing businesses.

Get in touch to speak to one of our Finance Executives about how your business may benefit from Surety Bonds.

Funding of Significant Change in Business

If you are a business owner and you are looking to grow it is crucial that you identify the right company to grow with and secure the appropriate funding.

Funding of significant change in your business is usually a complex mission with various alternatives available to finance, hence requiring thorough planning.

At Ledge, financing business growth is our area of expertise and we partner with businesses to provide funding and finance solutions for:

• Management buy-ins and buy-outs
• Buy-out of existing shareholders
• Shareholder exits
• Merger and acquisition finance of synergistic businesses
• Capital raising
• and many more.

We work with you to source the necessary funding to suit your individual circumstances.

Get in touch to find out more on how funding of significant change in business can help drive your growth.

Banking Facilities

Transactional banking facilities are a requirement for any business. Whether it be for their-day-to-day main trading bank account, cash management account, merchant facilities or payments, online banking solutions or international trade solutions.

Some businesses just need a trading account, whereas other businesses require a trading account coupled with online banking and then merchant facilities to allow their client to pay by credit card.

At Ledge, we can assist with your banking facilities in conjunction with your debt facilities and ensure they are tailored to the requirements of your business.

Ledge has access to the commercial, corporate and institutional areas of the bank and we position our client’s business and requirements into the appropriate area. They are given a personal transactional banking facility specialist which ensures that they receive the required level of service.

For more information on banking facilities contact us and we will be happy to assist.

Equipment Financing

Equipment Finance Solutions for All Your Business Needs

When it comes to equipment finance for business, Ledge are Western Australia’s leaders.

Specialising in commercial equipment financing since 1979, our extensive product offering includes:

• Novated Vehicle Leasing
• Finance Leasing
• Import Facilities
• Rental / Operating Lease
• Chattel Mortgage; and
• Hire Purchase

As equipment finance lenders, we can assist by providing flexible finance solutions for everything from vehicles and machinery to emerging renewable energy equipment. We can also structure the payment terms to best suit your cash flow.

Our team of specialist equipment finance brokers in Perth are skilled in all areas of financing. Their job is to represent you, the client, as opposed to the banks, which means we really do seek the very best solution for your business.

So, if you’re seeking an equipment leasing finance company, look no further! We provide reliable business equipment financing solutions to clients across the whole of Australia. Get in touch today and we will be more than happy to assist you!

Equipment Finance FAQs

When buying equipment there are many options available to you when it comes to financing your purchase, however, these options are not always as straightforward as you think.

Here are some questions that our team of Finance Executives are regularly asked:

Novated Vehicle Leases

Traditionally, the provision of a company car has been restricted to employees who need to be mobile for business reasons. In many cases, private use of the vehicle is restricted and often the employee has little choice as to the make, model, or colour of the car provided.

The use of novated leasing can overcome these problems and provides additional benefits to both the employee and the employer.

For more information contact us and we will be happy to assist with your next novated vehicle lease.

Finance Leasing

At Ledge we source appropriate finance leasing for businesses who wish to buy equipment for the major part of its useful life.

How finance leasing works:

1. A leasing company (lessor or owner) buys the asset for the user (lessee or hirer) and leases it to them for an agreed period.

2. At the end of the leased term the lessee can choose to purchase the equipment for an agreed amount, continue leasing the asset, or assist in selling it to a third party.

To find out more on how you may benefit from finance leasing contact us today.

Import Facilities

Import facilities allow you to finance and pay for goods that are imported from your overseas supplier. These facilities are set up in the currency you deal in, saving you time and stress as you don’t have to convert into Australian dollars and there is no need to gamble on the exchange rates.

Avoid the delays and complications associated with trading overseas and contact your Ledge Finance Executive today or contact us here.

Rental / Operating Lease

A Rental/Operating lease differs from a finance lease as you pay to use the equipment over a fixed period but you don’t necessarily own it at the end of the term.

When it comes to the end of the leasing term you have the option to:

• Return the goods to the lender and either upgrade to new or walk away
• Extend the period of the contract with reduced payments, or;
• Purchase the goods at the current market value

Contact us today to see how you may benefit from a rental / operating lease.

Hire Purchase

At Ledge, we offer Hire Purchase finance which allows you to hire equipment / assets and you pay a fixed monthly repayment over a set period of time. Once the payment period is over and any final (residual value) balance paid off, you have complete ownership of the asset.

Get in touch to find out more about Ledge’s Hire Purchase service and how it can assist your business growth.

Chattel Mortgage

A Chattel Mortgage is a commercial finance product which provides funds for businesses to purchase an asset. The business has ownership of the car or equipment and the asset is used as the security for the loan.

Unlike a Hire Purchase or a Rental / Operating Lease, a Chattel Mortgage gives businesses ownership of the asset straight away, allowing them to pay off the loan using the income generated from the asset.

Want to know more about Chattel Mortgages? Get in touch and we will be happy to assist with all your questions.

Property Finance

Property Finance Solutions for All Your Needs

Buying a property is one of the biggest financial commitments we make throughout our lives. Whether your property needs are residential or commercial – for personal or business – Ledge is committed to assisting you with your property finance requirements.

Providing property finance to Perth residents and businesses alike since 1979, we are considered one of the most trusted Australian property finance brokers.

We pride ourselves on delivering solutions that are personally tailored to your circumstances, including variable rate loans, fixed rate loans, or a combination of both.

Ledge’s long-term relationships with a range of lenders work to our clients’ advantage, giving them access to competitive rates and flexible terms and conditions which they would be unlikely to access from the lender directly.

Our service is designed to save you time, save you money and help take the stress out of deciding what finance option is best for your requirements.

Our residential property products are also available to the employees and families of our clients, providing them with access to the range of fantastic benefits available when using Ledge.

The many property finance products that Ledge offers include:

• Industrial / Commercial Property Finance
• Residential Investment Lending
• Property Development Finance
• Home Loans

Whether you are seeking finance for a single residential property, or a more complex property portfolio finance solution, Ledge can help. Contact us today for more information on how we can assist and streamline the process.

See more on Property Finance:
Property Loans: How often do you perform a check up on your debt?

Review your home or investment property loan

With interest rates frequently changing it’s important to stay on top of these changes to ensure you are getting the best deal on your home or investment property loan.

When did you last review your property loan? At Ledge, we can complete an obligation free home loan review.

Download our Home Loan Review form today, fill in as much information as you can, and send it to your Ledge Finance Executive.

If you only know some of the requested information on the form – don’t stress – we can find this out when we explore further.

Download our Home Loan Review Form

Industrial / Commercial Property Finance

Commercial or Industrial Property Lending solutions are generally a necessity for business owners who want to buy their own premises.

If you’re seeking finance for commercial property, Ledge can assist with all your needs. We will work closely with you to gain a full understanding of your circumstances and then devise a solution that is uniquely tailored to your specific requirements.

We have worked with businesses spanning a magnitude of different industries and professions. Get in touch to discuss your Commercial or Industrial Property Lending requirements.

Residential Investment Lending

Residential investment lending is not too different from any other type of home loan. It can help you purchase an investment property or refinance investment home loans from another lender.

At Ledge, we assist individuals and businesses to review their existing loans or help them source new loan facilities.

To find out more, contact us today.

Development Finance

If you are developing a property you may require development finance.

At Ledge, we provide varying development finance solutions for your residential and/or commercial property development plan.

Development loans are generally more complex than your traditional residential loans and funds are released in stages rather than one upfront sum.

To find out more on how Ledge can assist you with your development finance, contact us today.

Home Loans

Ledge provides home loan finance solutions that are personally tailored to your unique circumstances, including; variable loans, fixed rate loans, or a combination of both.

We understand the increasingly competitive and complex home lending market and our long-term relationships with lenders gives our clients access to flexible options and more competitive pricing.

Get in touch to see how we can assist you with the review of your existing home loan finance, or help you source new loan facilities.

If you’re a part of a strata owners corporation or body corporate and you struggle to find cash to pay for major works and renovations, get in touch to see how the StrataLoans facility can assist.