By Gareth Scott, Asset Finance Regional Head, Merchant West
Every year, something in your business gets fixed a season later than it should, while something else gets the capital approval a little sooner than expected.
The challenge is that a single capex budget is expected to cover assets that all age and need replacing on very different schedules, and inevitably something misses out.
Golf courses illustrate this with unusual clarity. September is when most courses begin their annual spring treatment, as the regrowth starts, and it presents a trade-off every board knows well.
Do you invest in the turf and irrigation work, or does the clubhouse upgrade take priority? More often than not, both are competing for the same pool of cash.
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Most golfers have played a course where the bunkers took a season longer to repair, or where the clubhouse fell a step behind the frontrunners.
It is rarely a sign of poor management. It’s what happens when one annual budget has to cater for several different maintenance and replacement cycles at the same time.
This year brings another layer of complexity. A strengthening El Niño system is raising the prospect of a much drier, hotter summer, and the finance team is right to want cash in reserve for whatever the phenomenon brings, whether that will mean higher costs or restrictions on water availability and possibly power.
The instinct to hold cash back is sound and nobody gets penalised for playing it safe.
Critical maintenance, however, does not wait for that certainty to arrive. On a golf course, an ageing irrigation system does not become more efficient because the board is being cautious with its budget.
The same is true of an outdated fleet or cooling system or a failing generator in any business you run.
This is where the right financing partner changes the equation. The detail most planning excludes is sequencing: work that needs to happen before a season of pressure sets in must be funded before that pressure arrives, not once it has already started to hurt.
By financing the assets that need attention today, the cash reserves your club has built over the years stay exactly where you need them, untouched by a decision that may have depleted them if funded by cash.
We understand clubs closely not because we spend our days on the course, but because we’ve financed almost every part of one, from the carts and turf equipment to the irrigation beneath the turf, to the clubhouse upgrade and renewable energy installation.
This is also true across every asset-heavy business we work with, primarily as a supplementary funder working alongside your bank rather than in place of it. The pattern is always the same.
Ambition is rarely the problem. Sequencing usually is.
Where most funders treat your business as a single annual budget, we go beyond that and structure finance around how each part of your operation ages, so each replacement gets funded on its own terms rather than competing for the same annual pool of cash.
Picture stepping onto that course mid-summer, with pristine fairways because the irrigation work happened, a new fleet of golf carts ready to go, bunkers that are exactly where they should be and the clubhouse feels current, even with a difficult season underway.
It happened because the essential work was funded ahead of the pressure that would otherwise have forced the board’s hand.
Cash reserves remain available to counter any predicted obstacles that may arise as they should never have been paying for the upgrades in the first place.
It comes down to funding the right assets at the right time, not spending more.
If this year’s budget conversation feels familiar, we would rather finance the assets you need, in the sequence you need them, before the pressure of the next season decides for you.
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