Why it pays to receive expert financial advice

A member with a little knowledge on maintaining their lawn shouldn’t be advising the course manager on the quality of the course – and a member with a little finance knowledge shouldn’t advise the club on the best way to pay for large machinery or irrigation purchases, writes Malcolm Pennycott from Golf Finance.

“A little knowledge is a dangerous thing” is a common saying which suggests having a small amount of knowledge or a limited understanding of something can lead to misguided actions or beliefs, which can subsequently have negative consequences.

“I’m not an expert, but…”

“I’m not a brain surgeon, but…”

“I’m not a pilot, but…”

“I’m not an agronomist, but…”

Rarely do the pearls that follow these statements prove to be insightful or helpful.

We see this all too often in the golf world, where certain club members or individuals have dogmatic opinions; often sweeping and absolutist views fuelled by “a little knowledge.”

The cliched example in golf is the “my front lawn” versus the golf course comparison.

It should be obvious to state that just because someone has some experience and “knowledge” in maintaining their lawn, it does not in any respect make them qualified to advise a head greenkeeper or course manager on what is required to produce a quality golf course.

Comparing your garden to a golf course is like comparing your local swimming pool to the sea.

There are clearly some very basic similarities, but the context and the scale of the comparison points could not be much further apart.

When you have a hammer in your hand, everything looks like a nail – members often take a very linear view of what is a complex issue and see only the simplistic answer. Even when driven by the best of intentions, actions that are influenced as a result can have destructive consequences for any business.

If we apply this to our world of asset finance, we see similarities in certain key features which set it apart from other areas of funding and finance. These are important to take note of and often are not on the radar of people who have a “little knowledge” of this subject.

For example, a sound knowledge of end of lease transactions is crucial and often hugely overlooked. In some situations, there is a belief that the deal with the lowest monthly payment on offer is always the best option. However, on some agreements, depending if the rebate percentage is set up at the end of the term, there can be an unwelcome surprise in store when it comes to carry out lease disposals.

Golf clubs often set up agreements on a hire purchase structure, simply because they don’t realise that through a finance lease they can spread the cost of the VAT across the term of the agreement – for a large machinery or irrigation purchase, this can be a significant outlay of which only a small percentage can be reclaimed by the club.

The traditional term for machinery finance has historically always been five years, with many clubs under the impression that this is the only finance period available. However, with the improved quality of many machines resulting in much longer usable lifespans, coupled with significant equipment cost increases, very often spreading the purchase over six or seven years makes much more financial sense.

Don’t let “a little knowledge” steer your golf club down a road without taking on the expert support and guidance that is available.

“The more you know, the more you realise you don’t know.” – Aristotle

For further advice and information on asset finance solutions, contact Golf Finance at sales@golffinance.co.uk or call 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 offer financial facilities from a number of funders and a list is available upon request