If you own a construction business, you know that you need equipment to operate. This includes things from office equipment to fleet vehicles to field equipment. In addition to cash flow and credit lines, a construction business that needs equipment might want to consider some other options to finance their purchases. Many finance companies, from commercial banks to equipment manufacturers offer a variety of options to finance the equipment.
However, before you look at how to finance your equipment purchase. It is important to take a closer look at the ways that equipment financing can be beneficial for your business. Below, we’re going to look at 10 of the benefits of financing equipment for your construction business.
Financing solutions offered by equipment companies are often flexible and can be tailored to fit your specific needs.
One of the major considerations that makes this a good option is the preservation of capital. After all, investing in large expenditures is a big financial risk, especially for smaller companies. If there’s an option to finance as opposed to spending cash, it can reduce the risk of investing in an asset that may or may not do what it’s intended to. In some cases, lease payments can be matched to the productivity of the equipment.
Improves Expense Planning
Another thing to consider is your cash flow and budgeting. If a company has to spend the cash, it causes a significant fluctuation in the budget. However, financing allows you to plan expenses. Another factor is tax considerations. A full payout lease or equipment loan means you can take a depreciation credit on the asset and an operating of fair-market-value lease does not allow you to take a depreciation credit but does allow lower payments.
Flexible Based on Business Cycle
Financing can be set to flex based on your business cycle. For example, some leases can be set to allow lower payments while the project is getting started and no revenue is being generated. In addition, seasonal fluctuations and other circumstances can be considered.
Allows You to Get Up-to-Date Equipment
As a business, you know that you don’t want to be running obsolete equipment. However, most companies can’t afford to keep buying the equipment they need to remain relevant in the industry. Financing allows companies to acquire what they need without having to spend a lot of cash to get it.
Gives Access to Equipment Experts
In some cases, equipment finance companies are experts in the field and can provide you with services that other sources can’t. Construction equipment finance companies often have a relationship with manufacturers/distributors, which means if you have questions, they can help.
Assists With Managing Obsolescence
This is a strategic benefit of lease financing equipment. Most of the lease agreements allow for fast, easy updates. Plus, most finance companies partner with vendors to make sure their customers have the appropriate equipment for their needs. Finally, when it comes time for an upgrade, the disposal and other burdens of the equipment are handled by the financer.
Provides Dependable Asset Management
Most finance companies will help you ensure that your equipment isn’t misused. They can help you track where it’s being used, how much it’s used, and when it’s time to upgrade/update. They will also help you with disposal when it is time to retire it.
Financing helps with equipment disposal
Another issue to consider is the disposal of the equipment. Most small businesses don’t have the resources/knowledge to manage/sell old equipment. The convenience of having this done by a third party can help you focus on your business.
Reduces Your Risk
Purchasing equipment comes with risks. By financing your equipment, you remove those risks so that you can focus on running your business.
Once you understand how the benefits of financing your equipment could benefit your business, you can get the equipment you need without having to worry. Contact Critical Capital Solutions. We will be more than happy to guide you through the process.