Buying capital goods for your business is no easy task. Heavy appliances like industrial grade ovens, an earth moving lorry etc cost a considerable amount of money. And putting your ready cash in these means you will no doubt run in to cash flow issues down the line. So the question is whether you would invest your available cash, go for a loan or even a lease. There are many factors to consider before selecting the best option for items such as earth moving equipment finance brokers. For an example items with a short lifecycle like computer parts and such will need to be leased as they do not last long, but for other items with a longer lifecycle a loan would be a better option as they give you the option to invest huge chunks of money without impacting your cash flow. Let’s look at some of the important factors to consider. Preliminary considerations: initially you must understand the type of appliances you are looking to purchase and their lifecycle, economic conditions in the country as well as the financial situation of the business. If there are cash flow issues, should you go for a full loan or a part loan?
If so what are the down payment and interest terms? Advantages of a loan: appliances that have a long lifecycle like 15 to 20 years are better off purchased by way of a awesome machinery finance rather than going for a short term lease. If you think it will serve you well for such a long time, it is best to purchase it rather than going for renting. There are also tax benefits for acquisition and ownership of appliances. An organisation can really reap tax benefits if they can show that the new purchases have increased production and profitability of the business. Another benefit is, knowing exactly what you need to pay for your loan, as the loan charges would be the same for the whole timeframe and will not fluctuate, while in the case of a lease this might not be the case. Used appliances: small businesses find it difficult to put in a lot of cash in to appliances, however if they are to improve and increase profitability they have to take some risks. In such situations some look to purchasing used appliances, thinking they will cost less. However this is not a good option as in most cases there will not be sufficient inventory to provide used ones and even if you do locate some there might not be any real financial benefits. There will also be questions about the performance levels of the items bought.
A business with ready cash could benefit more by outright purchasing of the equipment, as this will be more lucrative than a loan or a lease, however in problematic economic conditions, businesses must have plenty of ready cash available if they are to successfully operate.