Golf club leasing

Golf Club Leasing and Finance

90% of Golf Clubs in the UK use some form of financing for their club investments.
We have identified the most common forms of golf club leasing finance below to help you decide what is the best way for you.

90% of UK golf clubs will use leasing to finance equipment at some time in their life.

Golf Club Leasing – Hire Purchase / Lease Purchase

Spreads the cost of equipment over agreed fixed payment term
Payment terms can be monthly, quarterly, yearly and seasonal
Fixed interest rate
Keeps valuable cash in the business for other investments
Equipment becomes yours after the final payment has been made – usually this will be an end of agreement option-to-purchase fee
The total value of VAT is paid with the first instalment. If you are VAT registered you reclaim this in your quarterly VAT claim
The equipment is treated as if it had been purchased and is therefore capitalised in the balance sheet. Depreciation is provided by your regular method
Capital allowances are available

Finance Lease

The full cost of the equipment is spread over an agreed payment term
Payment terms can be monthly, quarterly, yearly and seasonal
Fixed interest rate
Keeps valuable cash in the business for other investments
VAT is paid on each rental over the course of the agreement
The interest element of your rentals can be treated as a business expense against any taxable profits
At the end of the agreement you will normally have 3 options:
1. Extend the rental period for a yearly peppercorn rental – often £100/year
2. Purchase the equipment – subject to conditions
3. Return the equipment to the funder

Operating Lease

The funder will take a view as to the likely cost of the future value of the equipment at the end of the agreement. This is called the Residual Value (RV). The RV will be deducted from the original capital cost and you will pay lower rentals during the period of the agreement.
Payment terms can be monthly, quarterly, yearly and seasonal
Fixed interest rate
Keeps valuable cash in the business for other investments
VAT is paid on each rental over the course of the agreement
Treated as Off- Balance Sheet
100% of the rentals are treated as an expense and can be offset against any taxable profits
At the end of the agreement you will normally have 3 options:

- - 1. Extend the initial rental period into a secondary rental period based on the Fair Market Value (FMV) of the equipment. The FMV will normally be similar to the initial RV cost and payments can be spread over a new 1 -3 year term
    2. Purchase the equipment, subject to conditions – at the FMV of the equipment
    3. Return the equipment to the funder

“Every year we gain and lose a few members. Every month members pay their fees. Every week green fees are paid and every day our pro shop and bar has takings. We pay our staff monthly, we cut our grass daily, the last thing we wish to do is to pay upfront for equipment that will last us five years.

Leasing makes our life so much easier from so many points of view. We can work out the cost of a locker per day, or how much a buggy will cost per round. We can fix our overheads and budget effectively and on the large value assets such as turf care, we can structure the rental repayments over summer months, keeping our cash flow in order in winter.

It doesn’t surprise us that 90% of clubs will use leasing as a form of financing assets.”

Quote from a club Secretary