Case Study

Engineering Machinery Upgrade

Company —
Engineering Company
Business Type —
Research & Development
Requirement —
Manufacturing & Engineering Finance
Solution —
Hire Purchase

Award Winning Company Stays Ahead of the Competition with Machinery Finance

Learn how a well-established engineering company, specialising in R & D CNC machining and milling engineering, expands its offer with new equipment and services.

The Challenge

Known for high-quality precision components and solutions for vapours industries, this business faced the challenge of staying at the forefront of technology to maintain their competitive edge. They realised the need to upgrade their existing CNC and milling engineering equipment to enhance productivity, efficiency, and accuracy.

Finance as a Solution

To overcome the challenges and finance their growth and modernisation plans, they decided to explore manufacturing finance options. They sought the expertise of Portman to provide tailored financial solutions specifically for businesses in the manufacturing sector.

Equipment Upgrades

This Engineering business identified the latest milling machinery the that would be the ideal equipment to update their CNC and milling products and services. A highly advanced and versatile five-axis CNC precision machine, enabling complex machining operations with exceptional accuracy was top of the shopping list.

To compliment, the latest turning unit offering horizontal turning with integrated milling functions was sort out to optimise productivity and reduce setup times.

Benefits

  1. Enhanced Productivity: The new equipment’s advanced technology and automation features allowed an increase production output and reduce production time, leading to greater efficiency and cost-effectiveness.

  2. Precision and Quality: The upgraded CNC and milling equipment provided superior precision, ensuring the manufacturing of high-quality components that meet or exceed client expectations.

  3. Diversification: With the acquisition of modern tractors and crop storage facilities, the business expanded its services to the agricultural sector, tapping into new revenue streams and widening its customer base.

  4. Competitive Advantage: By investing in the latest machinery, this Engineering business positioned itself as a frontrunner in the engineering industry, attracting more clients and lucrative contracts.

Challenges

  1. Initial Investment: The primary challenge was the substantial initial cost of acquiring the advanced CNC machines and agricultural equipment.
  2. Cash Flow Management: Upgrading and diversifying the business required careful financial planning to maintain a healthy cash flow during the investment phase.
  3. Asset Obsolescence: The engineering industry evolves rapidly, and there is always a risk of machinery becoming outdated over time.

How Finance Solved the Challenges

  1. Flexible Financing Options: Portman offered tailored financing solutions that allowed the equipment’s cost to be spread over several months or years, reducing the immediate financial burden.

  2. Conservation of Capital: Instead of tying up their capital in purchasing the machinery outright, this business could preserve their liquidity for other essential expenses and investments.

  3. Asset Management Solutions: To tackle asset obsolescence, Portman provided various asset management options, such as lease upgrades or equipment replacement, ensuring the business remained equipped with the latest technology.

Conclusion

Through strategic financing and collaboration with Portman the business successfully updated its CNC and milling engineering equipment, as well as ventured into new sectors.

The modernisation efforts enabled the company to improve productivity, maintain competitiveness, and broaden their service offerings, resulting in sustained growth and increased profitability. By leveraging CNC machinery finance, they navigated the challenges of business expansion.

If you’re looking to acquire milling machines or other computer aided manufacturing equipment, there’s a variety of business finance options; R & D equipment finance, CNC finance, lease finance, invoice finance and asset finance that could all be tailored to meet the specific needs of your business.

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Partner with Portman, for a successful future

There are plenty of finance options out there for you, deciding which is right for you will take time and consideration. But why should you choose these financing options from Portman?

At Portman Finance Group we are focused on serving the needs of you and your businesses, and have been doing so for thousands of other businesses since 2007, raising over £1 billion in funding for UK SMEs. 

We take the time to truly understand your business and what you need, ensuring we secure the right funding for you. As both a broker and a lender, we can also offer financial options that others cannot. We promise you will have one point of contact from start to end, providing you solutions quickly, sometimes within hours.

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Hire Purchase

Hire purchase usually involves paying the VAT and a deposit up-front. Fixed monthly repayments are then made, affected by whether you pay off the entire loan over the term or chose a final balloon payment. The final option to purchase is guaranteed for a nominal fee, transferring ownership of the asset to the customer.

Hire purchase is well-suited for situations where a company definitely wants to own the item at the end of the term, often where the asset has a significant usable lifespan, a high residual value and will not need to be upgraded.

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Lease Finance

Equipment leasing allows a business to acquire hard or soft assets without the upfront costs associated with large purchases. A lender purchases the item, the business then leases it through fixed monthly payments over an agreed term.

Typically, asset finance is provided for high value ‘hard’ assets such as machinery, equipment, or vehicles, but Portman also arranges asset finance for ‘soft’ assets such as IT, fitness, catering, or vending equipment, as well as premises fit-outs, furniture or even air-conditioning.

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Business Loans

Business loans are a way of borrowing money, which is repaid in monthly instalments, including interest, over an agreed term. Business loans are a common way to help smooth out cashflow fluctuations and take opportunities where otherwise they could be missed due to a lack of working capital.

Business loans can be secured or unsecured. Portman typically provides unsecured loans which can be more flexible and do not require collateral but are likely to require a personal guarantee. Secured loans are tied to an asset which the lender can claim ownership of if repayments are not made, these may be used in equipment refinance deals.

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Start Up Loans

New businesses often need an injection of finance to get them off the ground. Asset finance for new businesses allows you to focus on running your company and bringing in customers, confident that you have the equipment, vehicle or stock you need without the large initial outlay.

Using finance for your equipment means that you preserve the credit card or overdraft for contingency and operating expenses when the unexpected happens.

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Equipment Refinance

If you recently bought a high-value item outright but would now prefer to have financed it, we can help with a sale-and-lease-back agreement. If the item is less than 3m old, give us a copy of the invoice and we will calculate the current value. After a few checks and acceptance of the term and monthly repayments, we can give you the cash equivalent of the invoice to put back into the business. You’ll then make fixed monthly payments including interest, whilst your asset earns you money.

If your business owns high value assets that are not currently on finance, subject to a valuation, it is also possible to use them as security for a loan, with lenders offering a cash loan up to a % of the asset’s value.

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Recovery Loans

Recovery Loans offer an excellent way of making sure your business gets back on its feet after the long-term effects of the pandemic and subsequent supply chain disruption. Businesses with turnovers up to £45m, including those who have previously benefited from the government’s CBILS, BBL or RLS, can apply.

Recovery Loans can be used for any legitimate business purpose or simply to provide cashflow. Rates are capped and the government continues to guarantee 70% of the outstanding balance, giving added security for lenders who are now able to consider finance for businesses who may have previously found it difficult to obtain.

Up to £2m can be borrowed on terms from 2 to 6 years. Your personal private residence cannot be taken as security.

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