Over the past several years, the manufacturing financing sector has been experiencing a monumental revival in North America. Today’s manufacturing companies have a lot to look forward to, and that means planning ahead for future business and growth. In this current climate, it makes perfect sense to finance manufacturing equipment and reap the advantages. Whether you’re just starting out, or you’re a veteran player in the manufacturing field, it can help to examine the inherent benefits of financing equipment. Read along to learn about five of the greatest advantages available to you.
1) FISCAL ADVANTAGES
Spreading out payments on manufacturing equipment over time can not only alleviate upfront cost burdens, but it can also produce immediate cash flow. A company’s revenue will almost always outpace the cost of the manufacturing equipment, and the payments required. It also combats inflation right out of the box by settling immediately on a predetermined pricing structure, rather than waiting for costs to drive up over months or years. Even if a company has capital on hand to purchase the equipment outright, it may be wise to reconsider. Capital preservation is something all manufacturing companies should take into consideration, as large investments can carry even larger financial risks. Manufacturing equipment financing is a dual-purpose option, paving a clear pathway to greater ROI and faster company growth, without sacrificing too much capital upfront.
2) TAX BENEFITS
This is an important one. Bear in mind that lease payments may be tax deductible, and this translates into an opportunity to depreciate the purchase quicker if certain circumstances are met. From a business standpoint, this is highly advantageous, as it puts more money back into the company coffers which can be utilized for faster growth. It may seem obvious, but this advantage sometimes flies under the radar when companies are planning to purchase new equipment.
3) MORE OPTIONS
A company may customize funding around a wide variety of factors, from expenses and ROI, to cash flow. It also allows for greater purchasing power, which is valuable when it comes to negotiating better rates, prices and payments. Once these variables have been appropriately nailed down, a company may opt for fixed terms and interest rates in order to plan ahead for the long-term with full transparency and the ability to plan accordingly. Some companies may even negotiate for lower initial payments whilst their projects get off the ground, and revenue may be harder to come by. This is especially true for companies who need to take seasonal business into account. Using capital to purchase equipment outright may force companies to unnecessarily stretch the budget during leaner months, or between projects. Equipment financing gives peace of mind, especially if the term is fixed, and the company always knows what they are expected to pay.
4) TOP OF THE LINE TECHNOLOGY
Many businesses may not be able to afford cutting-edge equipment out of the starting gate, which is why financing is so advantageous. Term financing gives access to the latest equipment, and with that comes added benefits such as possible tax breaks and easy-to-manage finance options. This yields a tremendous competitive advantage, and increases the value of a company, while attracting new business. While financing the newest equipment may incur added upfront costs, they can be significantly offset by the increased reputation of the company, and the new clientele that come knocking on the door. Further, new equipment requires less maintenance and upkeep, and is backed by a warranty for added comfort.
The high-tech nature of manufacturing means that companies need to plan ahead and take a variety of factors into consideration. Purchasing of equipment however, should not be one of them. Financing equipment is the best way to strategize for the long-term, and take full advantage of the latest and greatest hardware to grow your business. If you’re ready to invest in new equipment, we invite you to get in touch with us Today, so we can help you with the process.