“Fore!” For Finance
Golf Finance outline four warning shouts that Golf Clubs need to heed when it comes to setting up asset finance agreements:
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1. What happens when the agreement ends?
While it may seem like a simple detail, many Golf Clubs fail to fully consider what happens when their asset finance agreement comes to an end. This is often due to changes in management and committees over time, leading to a lack of continuity in financial planning. Clubs should clarify their options on:
- Ownership vs. Return: Will the club own the asset at the end of the term, or will it need to be returned or refinanced?
- Extension or Buyout Terms: If continuing to use the asset, what are the terms for extending the agreement or purchasing it outright?
- Replacement Planning: If the asset is essential (e.g. course machinery, buggies, clubhouse equipment, irrigation systems), does the club have a plan in place to replace or upgrade it?
Without a clear strategy, clubs may find themselves scrambling for funds or left with outdated equipment that impacts the quality of their facilities.
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2. Are you evaluating the full financial picture?
While a low interest rate is always appealing, the broader terms and conditions often play a significant role in determining the true cost of an agreement. Key considerations include:
- Deposit Requirements: Some agreements require an upfront deposit, which can impact the club’s cash flow. For example, in a Hire Purchase agreement, the full VAT value must be paid up front.
- Flexibility: Does the agreement allow for seasonal payment structures that align with the club’s revenue patterns?
- Tax & Accounting Implications: Depending on the structure of the agreement, there may be tax benefits or accounting points to consider. Clubs should consult with an accountant to determine the best package for them.
By looking beyond just the interest rate, clubs can avoid unexpected costs and ensure they are making a well-informed financial decision.
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3. Do you have a reliable point of contact?
Having a dedicated point of contact can make a huge difference in managing the agreement effectively. A direct contact ensures:
- Continuity & Support: Having a reliable finance advisor ensures that specific knowledge isn’t lost, given club management changes over time.
- Quick Problem Resolution: If there are issues with payments, contract terms, or asset performance, an accessible contact can help resolve them efficiently.
- Proactive Advice: A good finance partner will not just provide funding but also help clubs plan for future needs and avoid financial pitfalls.
Clubs should establish a relationship with a trusted partner who understands the unique challenges of the golf industry.
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4. Are you planning for future capital projects?
Asset finance should fi t into a broader financial strategy, not just serve as a short-term solution. Clubs should consider:
- Long-Term Investment Planning: How does this agreement fi t into the club’s long-term financial roadmap for course improvements, clubhouse renovations, or equipment upgrades?
- Avoiding Overcommitment: Ensuring that today’s finance decisions don’t restrict future borrowing capacity for more critical projects.
- Sustainability & Growth: With environmental and technological advancements, clubs should assess whether they will need to invest in new solutions (e.g. electric golf carts, renewable energy systems) in the coming years.
A proactive approach to their capital projects ensures that clubs remain competitive, well-equipped, and financially stable in the long run.
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Taking heed of these four crucial points, will help Golf Clubs remain financially stable, well-equipped, and prepared for sustainable growth. By planning for the end of agreements, evaluating the full financial picture, maintaining a reliable point of contact, and aligning finance decisions with long-term goals, clubs can safeguard their future and move forward with confidence.
For further information, advice and tedious golf puns, contact the team at Golf Finance at sales@golffinance.co.uk or 01620 890200
*All finance subject to credit approval. Business users only. Golf Finance is an Appointed Representative of Rural finance Limited. Rural Finance Limited is authorised and regulated by the Financial Conduct Authority, FRN 630701. Rural Finance Limited is an authorised Credit Broker and not a lender. We off er financial facilities from a number of funders and a list is available upon request.