Capital Expenditure Deferral

In a time of uncertainty any capital expenditure needs to be assessed to determine if it is either essential for the continued running of the business or will generate significant new cash inflows.

It isn’t advisable for a business to use available cash or overdraft to fund capital expenditure as this will deplete the working capital and potentially make it less resilient.

There are many sources of finance for capital expenditure such as hire purchase and leasing which can match the expenditure more in line with the useful life of the particular asset, resulting in less pressure on cashflow and working capital.

Capital expenditure relating to your computer system is potentially one area where expenditure cannot easily be deferred, if for example staff are now working from home the robustness of your system could be even more critical. Replacing in-house servers with a cloud-based subscription alternative might now be a more cost-effective alternative to consider. Another way of deferring expenditure in replacing computer servers at the end of their lives is to explore whether extended warranties can be purchased, and servers instead replaced on a one by one basis.

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