Equipment Financing: How Will Fixed Monthly Payments Benefit You?

By Shreya Panchal| Jun 15, 2021| 867 Views
Equipment Financing: How Will Fixed Monthly Payments Benefit You?

Too many times, how a business purchases equipment is the last decision made. But it shouldn’t be.

You might buy equipment outright using your personal credit or the last of your business savings. That’s usually a mistake. Equipment is expensive, and you should be cautious about purchasing a long-term asset with short-term funds. The costs can significantly cut your profits and leave you unprepared to handle sudden expenses.

Tying up too much cash in equipment purchases can limit the options business expansion, whether geographic or additional service offering. If purchasing equipment is an essential part of expanding your operations, it’s time to begin thinking strategically to preserve that liquidity for future opportunities and smooth operations.

Equipment financing helps you avoid digging a massive hole in your balance sheet by breaking down the purchase cost into affordable monthly payments. Your business gets to acquire the equipment you need sooner and conserve cash; all while owning the equipment after the term.

According to Equipment Leasing and Finance Association Report, more than 80% of all U.S. companies utilize some form of equipment financing.

Given the present day's economic climate and the rapid pace of technological obsolescence, fixed monthly payments in equipment financing continue to be the flavor of the time. Not just because they are one of the most affordable modes of repayments, but also because it helps you conserve your working capital to run and grow your business.

Why are Fixed Monthly Payments So Popular?

We get asked this question all the time – "Why are fixed monthly payments for equipment financing so popular?" There are many reasons fixed monthly payments are favored, but the big one is financial stability. Having a predictable monthly payment is a budgeting essential. It allows your business to better forecast and plan your finances.

Business owner calculates their fixed monthly payment and expenses.

  • Makes The Equipment You Need Affordable
    When you lease equipment, you can spread the payments out affordably over time. With manageable monthly payments, your business doesn't have to wait years to save up for the whole amount. This lets you retain your capital for other day-to-day expenses.

Since a lease is not regarded as a long-term debt or liability, it will not appear on your financial statement as a debt! This makes you more alluring to financiers if you need them.

  • Let the Equipment Pay for Itself
    When you finance your equipment, you pay fixed monthly payments. But, unlike a car loan, your business is using that equipment each month to generate revenue. If your business is operating at a successful volume, your equipment will earn enough to help cover your payment and turn a profit.

Utilize a portion of the income produced to make the lease payment

  • Easy On Financial Forecast and Financial Planning
    With fixed monthly payments in equipment financing, you can accurately forecast the cash requirements since you know the designated amount and number of the future lease payments needed. It also helps deliver predictability since there are no future concerns about interest rate increases.
     
  • Easy On Cashflow
    Fixed monthly payments enable you to acquire equipment without investing hefty sums of capital upfront. You need only a minimal initial investment to get the equipment you need since its cost is covered over its lifetime as equated monthly installments.

"If it appreciates, buy it! If it depreciates, lease it!"
- John Paul Getty

Fixed monthly payments allow you to preserve your valuable capital for your business operations and growth while making it easy on the pocket for your business recovering from the aftermath of nationwide lockdowns.

Not Sure How Much You Need?

Fixed monthly payments are a smart choice for several businesses. The easiest way to calculate the monthly amount you will pay when you finance your equipment is using our exclusive equipment financing calculator.

Our equipment financing calculator can help you understand your total monthly payment on your fixed-term equipment lease. That will help you make an informed decision. Not only will you be able to get an estimated monthly payment, but you can also find out what your breakeven would be, how much tax savings you qualify for, and your potential term length.

You simply need to visit our website and put in the relevant equipment details. Then, just adjust the numbers till it matches your relevant financial goal.

So, What Are You Waiting For?

Get qualified for your next piece of equipment! 

Equipment financing can even prove to be a celebrated tool against inflation. This is because instead of paying the total cost of equipment upfront, the cash flow in shorter amounts delays the outlay of funds at present financing costs.

So, plan your business growth effectively and finance your equipment on the most competitive terms to succeed in the long run. Reach out to our equipment financing experts if you need further guidance on funding your equipment the right way.

Shreya Panchal

Shreya Panchal

P: 847.897.1763  |  EContact Me

As a content marketer, Shreya Panchal collaborated with Beacon Funding industry experts to write informative content on the commercial truck and decorated apparel industries.