In an uncertain economic climate, businesses are understandably cautious. For many firms, pulling up the drawbridge is the most obvious strategy. Defensive measures include cost-saving programmes and delays to capital investment, with management pressure on up-front costs.
Furthermore, companies are concerned that legal frameworks for funding may change under new regulatory and financial frameworks.
Nevertheless, there remains a compelling case for investing in LED lighting.
Lighting that pays for itself
Leasing enables businesses to fund LED lighting replacement programmes from their operating budgets. Leasing schemes such as Goodlight’s Bright Plan allow the replacement LED lighting to be paid-for directly from energy savings.
With no upfront cost, leasing schemes have zero impact on the cash reserves of the business. Companies can fund their new LED lighting completely out of their reduced energy costs, with extra left for the business every month.
Rates are fixed for two to five years, depending on the length of the agreement, which removes the uncertainty and makes budgeting easier. Moreover, rates can be significantly below typical bank lending.
Take the example of a typical five-year lease illustration from Bright Plan. A site survey recommends the installation of 100 five-foot LED replacements for fluorescent tubes. Total equipment value is £4,500.00 and this is funded by a weekly payment of £21.76, with a first payment of £94.28 followed by 59 monthly payments of £94.28. Total cost is £5,656.80. The company claims tax relief at 21% on the lease payments, totalling – £1,187.93, so the net cost of finance is £4,468.87.
Leasing is tax-smart too, with fixed monthly costs 100 per cent allowable under UK taxation rules.
Fixed rate schemes help companies ride out the economic uncertainties and risk is further lowered because the manufacturer’s guarantee covers the lighting units throughout the term of the lease.
When the lease finishes, the customer will own the lights outright and is still able to take advantage of remaining guarantee period. LEDs will continue to save the company money for years after the lease period.