Paying Cash For Your Equipment? See Why You Shouldn’t!
As you look at your strategic and tactical plans for growth that will lead to new revenues-think about this:
BUSINESSES THAT FINANCE EQUIPMENT ARE GROWING FASTER AND MORE FREQUENTLY THAN THOSE THAT PAY CASH.
Certainly, we all understand the “peace of mind” that may come with having no debt, but we also understand that when your business can’t leverage your position to take advantage of an opportunity-You Don’t Grow.
The fact is that equipment depreciates, meaning that, as it loses value, businesses really have to ensure they are getting paid for its use to drive return on investment. If a business pays cash and is typically only going to get a 5 or 7-year useful life from the asset, at the end of the term, they’ll have 100% equity in an asset worth only 15 -20% of the original investment.
At the end of the day, isn’t the point of investing cash to increase the value of the investment? If cash is tied up in fixed depreciating assets, it is not being invested in areas that create stronger returns. Or more simply-growth (ROI) is not maximized.
Companies that deploy equipment financing as a real strategy reap the following benefits (among others):
- Stronger and more predictable cash flows
- More cash on hand for higher return investments
- They use newer equipment, driving efficient operations
- They have fewer equipment failures
- They have lower employee turnover
- Easier to bid on and scale new business opportunities because expenses more closely match revenues
- They are growing!
At Cardinal Business Financing, we work with small and medium-sized businesses in a consultative manner which enables us to provide the exact and proper financing platform leading to an increase in ROI and cash flow. If you want to learn more about how “The Cardinal” can help your business scale and grow-give us a call at (866) 578-5999 ext. 101
Written by Brian Kirlin at SLS