For a business to remain competitive, it often needs top-of-the-line equipment and machinery to maximize efficiency and production. Unfortunately, this need is often most critical in the early stages of development, and this is when a business is most unlikely to afford the equipment it needs.
Equipment financing offers growing companies options to outfit their processes properly without putting forth all of their cash reserves. Here are some of the ways that financing can help a business preserve working capital:
1. Payment Flexibility
Many equipment financing programs can work with a business’s needs and sales trends to put together a payment schedule that either stays fixed for budget planning or adjusts according to revenue ebbs and flows.
2. Build Complete Systems
Sometimes, if a company needs a system of equipment, coming up with the capital to purchase it all outright can overwhelm the business. With financing, a business can generally obtain all the equipment necessary with affordable payments.
3. No Down Payment
Many alternate lenders can provide complete funding with no down payment or collateral other than the material itself, helping companies keep their cash reserves for more critical operating expenses.
4. Keep Technology Current
Often, leases for technology that becomes obsolete quickly have built-in programs for trading in the old and upgrading to newer models throughout the term of the contract.
5. Delivery Services
Manufacturers and dealers that lease equipment will also provide delivery and setup service for their machinery. At the end of the term, many will also take care of the removal, allowing companies to avoid potential costs and penalties for improper disposal.
6. Maintenance Services
Leases generally include routine maintenance, troubleshooting, and operating supplies, helping businesses save money by not needing to hire contractors that are less familiar with the equipment.
7. Better Equipment, Better Process, Better Cash Flow
Newer, more effective equipment can help businesses modernize their production, increasing output and the potential for sales growth. Updated technology like computer hardware and software can help office employees work more efficiently and cut downtime while waiting for slow copiers or computer programs to run.
Streamlining internal processes, when handled correctly, will often add to a company’s bottom line, increasing cash flow and allowing the business to build additional working capital to fund growth. Equipment financing can make the required machinery more affordable while helping businesses keep their current cash flow, giving them financial flexibility for whatever lies down the road.