Trying to Decide Between Paying Cash vs Equipment Financing?
There is an industry myth that says paying for your equipment with cash “is always cheaper because you avoid paying financing charges.” Many business owners make the mistake of relying on personal savings or reinvestment of business earnings alone. The truth is it is nearly impossible to scale your business without additional capital.
Many business owners make the mistake of not balancing equipment cost and cash flow. If you use all your available cash on equipment, how will you handle unexpected emergencies or take on new opportunities?
Equipment Financing Can Be Crucial for Growing Your Business!
Eventually, there comes a time when external capital is needed for growth. That means with the right equipment financing for your business, you don’t have to spend your hard-earned cash on a large equipment purchase. You can keep your business liquid while adding more equipment.
While the traditional approach of paying cash upfront may seem straightforward, exploring financing options presents a myriad of benefits that can propel businesses towards growth and prosperity.
7 Benefits of Choosing Equipment Financing vs Cash
- Preservation of Capital: One of the most notable advantages of financing equipment is the preservation of capital. By opting for financing solutions, businesses can conserve their cash reserves for essential operations, unforeseen expenses, or strategic initiatives. This ensures liquidity and financial flexibility, safeguarding the company against potential cash flow challenges or economic downturns.
- Improved Cash Flow Management: Financing equipment allows businesses to spread the cost of acquisition over time through manageable monthly payments. This predictable expense structure enables more effective cash flow management, as companies can allocate resources strategically and optimize working capital for day-to-day operations or growth initiatives. Additionally, fixed monthly payments simplify budgeting and forecasting, providing greater financial visibility and control. See how affordable your monthly payment could be by estimating a payment.
- Access to State-of-the-Art Technology: In today's rapidly evolving marketplace, technological innovation is often synonymous with competitive advantage. Financing equipment enables businesses to access state-of-the-art technology and equipment without bearing the full upfront cost. This empowers companies to stay ahead of the curve, enhance operational efficiency, and deliver superior products or services to customers, thereby strengthening their market position and driving revenue growth.
- Tax Benefits and Financial Flexibility: Financing equipment offers potential tax advantages that may not be available with cash purchases. Depending on the financing structure, businesses may be eligible to deduct lease payments or depreciate financed assets, resulting in significant tax savings over time.
- Mitigation of Obsolescence Risks: In industries characterized by rapid technological advancements, the risk of equipment obsolescence is a pertinent concern. Financing equipment mitigates this risk by enabling businesses to upgrade or replace assets at the end of the financing term, ensuring access to cutting-edge technology and maintaining operational efficiency. This flexibility to adapt to evolving market trends and customer preferences is essential for sustaining long-term competitiveness and relevance. Read the article to learn what lease-to-own solution is right for your business.
- Enhanced ROI and Productivity: By investing in high-quality equipment through financing, businesses can realize a faster return on investment (ROI) and maximize productivity gains. Upgraded or specialized equipment can streamline workflows, reduce downtime, improve product quality, and increase output capacity, resulting in tangible cost savings and revenue generation opportunities.
Want to learn how much activity your business needs to conduct to cover the cost of your monthly equipment financing payment? Use Beacon’s Breakeven calculator. You can quickly gauge how much activity your business needs to cover the cost of its monthly equipment financing payment. No complicated formulas are required. download Beacon Funding’s mobile app in the App Store or Google Play to try it.
There are many directions you can take when it comes to funding equipment for your business. It's up to you to decide what is best for your business when it comes to your next equipment purchase. By embracing strategic financing strategies, companies can unlock their full potential and position themselves for long-term prosperity and resilience.
Since 1990, Beacon Funding has helped businesses nationwide find best-in-class equipment financing solutions. Beacon Funding approves 7/10 businesses for the funds they need.
Join the thousands of happy customers that have successfully fulfilled their equipment financing needs with Beacon Funding. By specializing in niche equipment industries, we’ve become experts in financing equipment. As a result, we can build customized financing plans that meet YOUR needs.