Running a business is difficult enough without having to worry about bankrolling equipment. When you add in the cost of acquiring, maintaining and updating the equipment you need to remain competitive, it becomes doubly challenging.
Technology is changing rapidly. The equipment that was cutting edge just mere years ago may be hindering your business now. But how do you stay on the cutting edge without severely disrupting your cash flow? The answer is obvious, but you’d be surprised how many businesses out there never consider the option: equipment financing.
If you run a business reliant on equipment, then expert financing through loans, leases, refinancing or collateral mortgageis a no-brainer. Here’s why.
Improved Cash Flow
If you look up any article on “improving cash flow 101“, they will probably tell you to lease.That’s because when you lease, you forego the costly upfront hits to working capital, spreading the cost out over manageable monthly payments instead.
Equipment purchases are big purchases. It doesn’t make either the short- or long-term to paralyze your working capital in service of equipment acquisition – especially if that equipment may need maintenance and replacement in the near future. When you choose equipment financing, you can use that free working capital elsewhere in the budget to ensure operating expenses are covered.
Let’s take the case study of a clinic that opened its doors a few years ago. When the clinic opened, it featured expensive equipment that was reasonably modern.Now, compared to the cutting-edge technologies deployed by other clinics in the area, the equipment looks and feels dated.
The clinic has a choice: eitheracquire new equipment or risk being seen as outdated, obsolete. If the clinic decides to purchase new equipment, not only will their working capital take a hit (see above), but there is no guarantee they won’t have to turn around and purchase even newer equipment in a few years. It’s a bad deal.
However, if the clinic finances its medical equipment, it can stay on top of technological trends without worrying about the upfront cost.
Waiting until you have enough working capital to afford new equipment can be disruptive to productivity. If your business needs something, it needs it now – not later.
There’s no sense in halting operations or working at a reduced capacity just because you can’t afford the upfront cost of equipment. Ironically, that can wind up costing you more money. By forming an ongoing relationship with professional equipment financing experts, you can make certain that your business always acquires the equipment it needs when you need it.
Next time you’re considering hollowing out your business term loans or credit lines to bankroll new equipment, think twice. You always have alternatives. If you’re considering equipment financing, just make sure to choose a company with experience. You want an equipment financing expert that puts in the effort to understand your business needs, and comes up with creative, tailor-made solutions.