Have you ever heard the old adage: “I don’t buy something if I can’t afford to pay for it”? Wise words that on paper make sense. However, if you can afford it, that doesn’t mean you need to use the cash in your wallet to pay for it.
Unfortunately, many people live by these words and as a result miss out on opportunities to buy the heavy equipment and trucks they need. Most of the customers Ritchie Bros. Financial Services works with use financing to help shape their business for years to come. For them, financing is a tool they utilize to grow their business. Here are five reasons our customers take advantage of financing – rather than opening their wallet – when looking to buy some new gear.
1. Be smart
Perhaps the top reason business owners finance or lease is that it saves the cash they need to run their business. And as any business owner knows, it’s often difficult to find room in a budget for equipment expenditures among other fixed expenses (payroll, office space, etc.) and unexpected expenses (repairs, surprises during a contract, etc.). As the old saying goes, “Cash is king!”
2. Be nimble
Businesses that use heavy machinery and transportation equipment are typically very capital intensive. As a result, cash flow is the life of the business, especially during times of uncertainty. Keeping your cash on hand will allow you to keep working when your receivables are behind and it can allow you to jump on additional jobs while others sit on the sideline.
3. Be best in class
Financing allows you to buy the equipment best suited for the job and not best suited for your budget. Rather than individually buying new equipment in full, which can be expensive and inefficient, leasing allows a company to use up-to-date technology and equipment without paying for it all at once and risking the health of their cash flow.
4. Be established
For new or established businesses, financing enables you to build up comparable credit. This means when you’re looking to borrow, money lenders look at comparable dollar amounts that you’ve borrowed previously to see if you have shown the ability to service that amount of debt. If you have that history, you’ll get easier and quicker access to money if needed. Again for businesses that rely on heavy machinery or transportation equipment, having quick access to large amounts of capital can be the difference between jumping on an opportunity and having to pass on it.
5. Be tax savvy
If your business is having a banner year and you don’t want the tax man to take his maximum cut, certain leasing contracts allow you to generate some additional expenses you can write off against your income. Talk to your accounting professional, as you may be missing out on a great opportunity to save some money!
Whether you’re a small, new, or established business, reconsider your cash purchases of equipment and trucks. Get the equipment and trucks you need and save you capital with flexible financing and leasing from Ritchie Bros. Financial Services today!