What is a soft asset?
04 Oct 2021
When it comes to financing your business, it can sometimes be a challenge knowing where to start. In addition to all the opportunities available to you, knowing what the terms used by finance companies mean and whether these will apply to your business can be confusing.
One such term you will hear a lot about is asset finance. Key to understanding asset finance is first understanding what is meant by an asset.
Assets are an item that you or your business own that have a value, such as buildings, money in the bank, vehicles, plant and machinery, stock, and are generally categorised as hard assets or soft assets.
Here, we look at the term soft asset and what this actually means:
What is a soft asset?
Soft assets are essential to the running of your business. They hold value to your business and can provide sufficient security to a lender but typically have little or no resale value. These are usually assets that are not physical but are still required for the successful management of your business.
Below are a few examples of soft assets:
- IT infrastructure
- computer hardware (pcs, laptops etc.)
- computer software
- data storage
- fire safety
- building automation
- other electronics
- office furniture (chairs, desks, printers)
- audio visual equipment
- telecommunications systems
- CCTV/security systems
- vending machines
- recycling equipment
- gym equipment
- cleaning & laundry
- point of sale
Soft assets may appear harder to finance due to their lower value, alongside their further reduction in value over time, but can be equally as important for the sustainable operation of your business.
Let’s take IT infrastructure as an example:
IT infrastructure generally develops at a rapid rate. The value therefore quickly diminishes. However, as a business, it is important to maintain up-to-date IT systems for security, to keep ahead of competitors and to maintain the efficient running of your business. The maintenance costs of replacing hardware and updating software can be expensive so, in order to assist cash flow, businesses may look to finance soft assets.
How can you finance soft assets?
With various forms of finance agreements available, the best solution will depend on the individual objectives of your business.
Asset finance can be a great way to finance these assets and is a great way to support the growth of your business. Alternatively, we may be able to offer alternative solutions that can improve your cashflow, freeing up cash to buy the soft assets.
It may seem complicated but here at Custom Business Finance we will break this down for you and advise on a solution that will be both cost effective and help your business reach its full potential.
What is the benefit to financing soft assets?
Having the right assets is essential for any business to be successful. Acquisition of necessary assets is likely to form an integral part of a business plan for growth but there may be concern surrounding the financial outlay.
Asset finance enables businesses of all sizes to acquire the assets that they need in order to grow and prosper, whilst minimising the impact on working capital.
Soft asset finance can benefit company cash flow by being able to spread the cost over an agreed schedule, rather than one lump sum payment. This will ensure that your business has the essential tools that it needs whilst managing cash flow.
Soft asset finance can also provide flexibility as payments can be structured according to your business’s particular requirements and anticipated cash flow.
Get in touch
To speak to our team about soft asset finance or any other financial support for your business:
Call 0114 442 8008
For more information on asset finance see custombusinessfinance.co.uk/asset-management