How to Finance Your Fashion EPoS and Stock Management System? Your Options Explained

You’ve already decided that the right fashion EPoS can help your retail business grow, but how should you finance your system? Explore some essential insights from specialist Paul Fullalove, of experts Three Software, before you take your next step.

Paul, who leads the team behind the highly-trusted Retail3 EPoS and stock management system, has explained the pros and cons behind using cash, rental, hire purchase and leasing.

Read on for a quick, simple fashion EPoS overview…


Financing Your Fashion EPoS: 1, Cash

You’ve chosen the right EPoS system for your fashion retail business – congratulations.

A fashion EPoS is, of course, much more than just a single ‘element’. Instead, the right choice will be part of the backbone of your business and central to how you monitor and control your store as you grow.

Businesses owners who’re ready to take their fashion retail company to the next level often find that stepping up to system offering sales, stock, ordering, loyalty systems, management information and more – in a mobile, scalable way – can help the efficiency and processes of their entire company.

For expert assistance, and a demonstration of how Retail3 can make this happen, just ask.

Using Cash

Back to funding your fashion EPoS, however, starting with one essential consideration: what’s the ‘useful’ life of your investment?

Three Software CEO Paul points out that “typically five years would be the minimum” while “most small to medium sized stores will use their fashion EPoS system for seven years”.

With this first factor taken into account, how does using cash compare to other fashion EPoS funding options?

“Let’s assume the cost of your new EPoS system in the UK is £10,000.

“Do you have the ‘free’ cash available within the business or through an overdraft? Most companies consider protecting their cash resources as paramount. After all, cash flow management is a key ingredient of successful companies.

“If you buy £10,000 worth of merchandise can you turn it into a £10,000 gross profit within a reasonably short period of time? If you have a downturn can you use £10,000 to fund you through that period?

“The investment in a fashion EPoS system will provide significant benefits to your business, but only over a period of time.


“Most businesses use finance to invest in strategic assets to protect their ‘cash’ within the business.”


Financing Your Fashion EPoS: 2, Renting

Renting a fashion EPoS may look, on the surface, like an attractive option. But businesses can find renting to be an expensive and restrictive approach.

As we’ve discussed, it’s likely that you’ll need your system for five years at least. As renters generally apply an annual price rise – conservatively, plan for an 3% annual rise – the cost of renting including this 3% should be considered over five years or more.

The ONLY Recommended Time to Rent?

Paul’s assessment of renting as a way to finance your fashion EPoS?

“Within your rental agreement you’ll have certain activity levels, such as the number of SKUs, the number of transactions, etc. Once you breach these limits you will incure additional monthly costs.

“Support within the rental agreement is generally very prescribed and inflexible. You may only receive 10 hours per month, after which you must pay. Hours are generally limited to business hours, not retail hours, while support is only available 5 days per week, not 7 days per week.

“If you complete a detailed financial analysis comparing renting a system versus financing a system over a five year period the cost of renting will be at least 25% more expensive.


“You should only consider renting if you don’t qualify for finance.”


Financing Your Fashion EPoS: 3, Hire Purchase or Leasing?

Some good news about HP and leasing?

“Historically, finance companies required a size-able deposit or a number of advance rentals. This is no longer the case.

“Most finance companies will offer funding based on one monthly advanced payment.

“Based on using your system for five years means that a HP or leasing agreement offers considerable saving over a rental agreement,” Paul explained.

For example…

Cost: £10,000 – paid Day 1 Year 1 Rentals: £1045 per quarter (Payable over 12 qtrs)

Year 1: £10,000 x 18% = £1,800 Year 1: 4 qtrs x £1020 = £4,080

Year 2: £6,000 x 18% = £1,080 Year 2: 4 qtrs x £1020 = £4,080

Year 3: £4,500 x 18% = £810 Year 3: 4 qtrs x £1020 = £4,080

Tax Allowable Expenditure After 3 years = £3,690 Tax Allowable Expenditure After 3 years = £12,240

Therefore, in the example above, leasing all the hardware and software provides a tax advantage of £8,550


Womens retail store with womens clothes on displayHP vs Leasing Compared

When considering leasing or hire purchase, it’s important to consider key factors.

Remember that if you lease, the system remains property of the leasing company until the agreement is finished, but with HP, the person hiring can choose to buy at the end of the agreement.

Looking at length of time for EPoS, leases can run for a longer period compared to HP, and depreciation is also claimed by the leasing company, whereas with HP, the person hiring can claim the depreciation.

Comparing costs of leasing and HP, lease costs are rental payment, HP costs are a principal amount and effective interest during the agreement.
The tax impact of lease rentals is categorised as expenditure by the person leasing, compared to HP where the interest component is categorised as expenditure by the person leasing.

With leasing, the amount financed is complete financing, with HP it is partial financing.

And finally, when it comes to maintaining EPoS for your business, leasing means it is your responsibility, compared with HP where maintenance is responsibility of the hirer.

While the ideal EPoS for your business can, of course, be a vital part achieving results for your business, the decisions you make now can also have an important impact from the top to toe of your fashion retail operation.


Pausing to consider your options at this stage will help make sure your new EPoS and stock management system forms part of the foundations supporting the right future for your business.


About us: The Three Software difference? We’re a trusted, specialist team delivering EPoS solutions in the UK and Ireland, including innovative cloud-based EPoS and business intelligence solutions, using decades of combined fashion retail and tech expertise.


Request a demo – We’ll show you how we create business success through fashion retail know-how