One of the most important considerations when you add heavy equipment to your assets is how you pay for it. If you have the cash on hand to buy it directly, it may seem like a no-brainer. But there are benefits to financing new equipment instead of paying for it outright that might prove to be very valuable for your business. Let's look at the advantages of financing, then see how they often still apply even when your business has enough cash on hand to buy outright.
Why should you consider financing your heavy equipment?
These advantages are all important for any business that wants to bring more equipment into the fold. And if your enterprise has the cash on hand to buy equipment directly, these benefits are still very relevant.
Heavy equipment is expensive. There's no way around it. Even if your business has the cash on hand to purchase a brand new backhoe, loader, grader or whichever type of machinery you need, how will that spending impact your budget? Will you still have enough cash on hand to smooth out a slow month or quarter, hire additional staff to deal with an influx of new work, or purchase additional materials or assets needed to successfully bid on a potentially lucrative project?
If purchasing a new piece of equipment means giving up most of your working capital, financing can be an effective solution. You can still set money aside for each monthly payment, but you don't need to commit to a major financial decision all at once. Instead, your organization remains financially flexible.
Similarly, financing allows your company to bring on more than one piece of new heavy machinery at a time. If your organization truly needs a few pieces of equipment but can only afford to purchase a single one, financing can put your company in the best possible operational position. You'll need to carefully review your finances to make sure that you can handle the several payments going forward. But if you have the cash on hand to make a direct purchase, you can at least consider the affordability of securing a few long-term leases instead.
Financing heavy equipment gives your business many of the positives that come along with a direct purchase. That includes eventual ownership of the equipment at the end of the financing agreement, in many cases. At the same time, financing helps your company distribute costs, allowing for more financial agility. To learn more about equipment financing options for your business, get in touch with Cat Financial today!