Equipment Financing : Helping Business Grow and Thrive

Equipment Financing: Helping businesses grow and thrive
When it comes to equipment needs, each business is unique. It has its own list of priorities – especially in choosing between buying or financing equipment. There are no right or wrong choices as strategies differ between businesses. Not all purchasing strategies yield successful results. Various factors, such as a company’s budget and the equipment’s cost must be taken into consideration.
The main challenge for businesses is to maintain their equipment at optimal levels. Modern equipment is also essential as it can help businesses involved in construction thrive. They can turn to equipment finance for the following reasons:

-  Lower monthly payments.
-  Upgrading equipment to avoid obsolescence.
- Leveraging on floating or fixed rate financing.
-  Financing helps companies conserve their working capital.
- Take advantage of under utilised or unused tax incentives.
-  Considering the business’ overall capital or annual budget.

Given the above-mentioned reasons, equipment financing is a good alternative to buying. It allows businesses to lower their initial costs compared to purchasing them up front Aside from this, here are some of the key advantages of financing equipment over buying:

Risk reduction

Risks are synonymous with equipment purchases and entrepreneurs try to avoid these. Equipment financing helps as it helps mitigates investment uncertainty. Some of these include obsolescence and poor asset management. It also allows business owners to save on overhead costs, increase efficiency and focus on their business. Unnecessary risks are reduced which helps meet business goals.  

Assets management

Asset management is another of the benefits of equipment finance. Most financing institutions offer asset management services to their clients. This type of service helps businesses track their equipment’s status, installation schedules, preventive maintenance checks and even its disposal when the equipment reaches its end-of-life cycle. In addition, an effective asset management program monitors if the company’s equipment is either over-utilised or under-utilised.

Safeguards against inflation

Since the finance company absorbs the effects of equipment devaluation and other risks, equipment financing safeguards businesses against inflation. It is an effective hedge as companies do not need to pay the equipment’s total cost. Instead, its actual cost is spread out into monthly payments and the loan’s rates are locked. Moreover, the finance company absorbs other financial risks which can affect their client’s growth.

Access to the latest technology

Equipment reaching their end-of-life is the greatest threat to any company. The need to access the latest technology is essential for any business to thrive. Thanks to business equipment finance companies, businesses can now enjoy modern technology. They help entrepreneurs acquire the best equipment for their business. Since these finance institutions forge partnerships with vendors, they can easily find the right equipment for their clients.
Not all businesses can afford to buy the equipment they need to stay competitive. Fortunately, finance programs help procure equipment, system upgrades or replacements for their business. Up-to-date technology is now within their reach.

Offers equipment expertise and support

Most companies involved in equipment financing are also equipment specialists. Businesses will benefit from their expertise as these institutions forge special relationships with distributors and equipment manufacturers. Since they are also familiar with the different types of equipment and industry categories, equipment financiers are valued consultants. Adjusting residual rates through different asset management solutions will also benefit clients.

Preserved capital and flexible financial solutions

Outright cash purchases may not yield the returns entrepreneurs expect from their newly acquired assets. It may also cost them more in the future. Equipment financing helps preserve the business’ capital by protecting business owners from these uncertainties. It lets them hold on to their capital so it can be used for other things, such as research and development (R&D), marketing, expansion and business improvements.
Financing institutions also offer various financial solutions which can be tailored to suit a business’ needs. Even if the company is still earning revenue from its equipment or undergoing expansion, they have solutions to give business owners peace of mind.

Tax considerations are granted to the borrower

Tax considerations are given to borrowers because the financial institution shoulders the equipment’s depreciation and retains its title. These tax benefits are also granted to equipment loans. Businesses can enjoy significant tax deductions when purchasing equipment through financing.

Helps maintain cash flow through budgeting and expense planning

Cash is the lifeblood of any business and equipment financing can help maintain its flow. Budgeting helps by customising payments to match a company’s current cash flow (even the seasonal ones), while expense planning avoids budget fluctuations and huge capital outlays. It keeps a business’ cash flow intact.
The benefits of equipment financing can help any business grow exponentially. It is a vital resource which can help them thrive in a highly competitive market. Do not wait for tomorrow and start buying business equipment today.
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