I am sure you have heard that old saying: “I don’t buy unless I can afford to pay for it”? In the old days it made sense. However, if you can afford it, that doesn’t mean you need to use the cash in your wallet to pay for it.
Unfortunately, many people live by these words and as a result miss out on opportunities to acquire the equipment their company needs. Most of the clients BNC Finance works with use finance equipment to support their long term cash flow objectives. Equipment Financing can be utilized for long term growth objectives and increased Return on Investment. Here are five reasons our customers take advantage of financing equipment – rather than opening their wallet – when looking to acquire equipment.
1. Safety Net
Conserving cash is one of the most important aspects of running a business. Cash is the lifeblood of a business, it only makes since to manage it wisely for unexpected emergencies or business opportunities. As any business owner knows, it can be difficult to find room in a budget for equipment expenditures among other fixed expenses (payroll, office space, etc.) and unexpected expenses (repairs, surprises during a contract, etc.). Financing equipment will free up capital for any urgent expenditures. As the old saying goes, “Cash is king!”
2. Immediate Income
Buying equipment has an immediate negative impact on cash flow because of the need to make one large payment up front. Equipment Financing has only a slight impact on cash flow because small monthly payments are made over time. With a low monthly payment you can start earning immediate income from your acquisition.
3. Pursue Better Opportunities
Equipment Financing allows you to buy the equipment best suited for the project and not best suited for your budget. Rather than individually buying new equipment in full, which can be expensive and inefficient, equipment financing allows a company to use up-to-date technology and equipment without paying for it all at once and risking the health of their cash flow.
4. Establish Credit
For new or established businesses, equipment financing enables you to build up comparable credit. When you are looking to borrow money lenders look at the history of what you have borrowed in the past. If you do not have comparable debt you will not qualify for the loan. If you have the history it will be easier to access larger amounts of capital. Having quick access to large amounts of capital will allow you to pursue any large opportunities that may arise.
5. Reduce Taxes
Certain equipment financing and leasing contracts allow you to generate some additional expenses you can write off against your income. Make sure to reach out to your accounting professional because you could be missing out on some opportunities to save money. Tax Code Section 179 allows you to accelerate depreciation on equipment acquisitions.
Whether you’re a small, new, or established business, reconsider your cash purchases of equipment. Equipment financing allows you to get the best equipment suited for your business while conserving capital. BNC Finance offers flexible equipment financing and leasing options Click here to schedule a call with one of our advisers or Apply Now from your smartphone. BNC Finance has a wide range of industry solutions.