Why leasing makes sense for business
Starting or growing a business can be a difficult task, and if market conditions are uncertain it is difficult to commit yourself to spending thousands of dollars on new equipment, even if it may be essential in running your business more effectively.
An important part of this process is prioritising which equipment you need, and selecting something that fits your budget and requirements. More important, however, is how you are going to pay for the goods. If you have the cash flow to buy equipment, but not the capital to purchase equipment outright, you may want to consider equipment finance. This may even be a better option if you have funds available, as there are a number of benefits associated with it.
What type of equipment?
Business equipment of all sorts can be financed, from IT Equipment right through to Heavy Machinery, Heavy Commercial Vehicles, Company Motor Vehicles, Health Care Equipment, Gym Equipment and even Medical Equipment. Each of these types of equipment will have different types of finance associated with them that take into account the lifecycle of the equipment, your business structure, and more.
When you have a good idea of what you need, ask yourself the following questions about the equipment you intend to finance:
- Is this equipment required every day, intermittently, or maybe seasonally?
- Which brand/model do you want/need and why?
- Have you considered buying used or refurbished equipment?
- Is the equipment additional or a replacement?
To structure a finance package suitable for you, equipment finance consultants will need the specifics of what you intend to purchase, and how it will be used.
Your cash flow can be significantly affected by buying expensive equipment outright. By acquiring your resources through equipment finance, you can pay for them throughout their useful life, rather than paying one lump sum. More often than not, you can finance 100% of your equipment cost through equipment finance, and won’t even need a deposit amount. You can also structure your payments to account for projected growth of your business, seasonal cash flow and more, so you’re the value of your repayments, and when they are due, suit you and your business.
By financing your equipment, you can free up cash and other lines of credit for use in other areas of your business. The financial risk of large capital purchases, especially for a small business, can be significant. Financing your asset purchases can serve to reduce this risk.
It is generally quite simple to plan repayments of your equipment finance, as it is normally done at a fixed rate with all payments during the term of the agreement known in advance. Additionally, you are usually able to finance your assets in accordance with your business’ growth and seasonal cash flow, so you can have lower repayments while you are still building your business up.
It is often important in today’s market to have up-to-date equipment. In some industries, such as airlines, engineering firms, and GPS-directed taxis, or even Computer-Aided design, it is vital. Equipment finance can provide the answer to needing the newest technology and equipment for your business. Your finance can also be structured in a way that makes updates simple, ensuring you don’t end up with obsolete equipment.
Flexibility to suit
There a plenty of options available for financing your equipment, so you can find one that will suit your accounting, GST, ownership, and payment requirements, throughout the term of the contract, and when it ends. Knowing how long you will need the equipment, and being aware of your company’s cash flow and projected growth, as well as your personal tax situation, will aid your finance consultant in structuring an equipment finance package that will work best for your business’ needs.
Hold your cash – and have your equipment too
Financing business equipment can be difficult, but using an experienced broker like Naritas will help you find the right structure and right lender for your business equipment finance needs, while making the process efficient and hassle-free.