Some financing methods give you options such as deferred, step, and seasonal payment options to help you address business cycle fluctuations with a minimum impact to your budget. Cash flow is king in all economic cycles, but life-sustaining in challenging times.
Gaining Better Control of Your Budget
Depending on your situation, it may be advantageous to depreciate equipment year by year, expense it month by month, or take a lump-sum Section 179 deduction. Having a broad mix of financing allows you to manage your equipment acquisitions in a way that’s most favorable from a tax standpoint.
Credit is one of those things that are better to have than need, but when you need it, you need it. Having multiple financing methods available lets you keep more of your credit lines open and ready. Not only does this prepare you for the unexpected and unstable economic conditions, but lower credit utilization can also improve your credit rating.
Reducing Credit Exposure
Technology changes fast, and some financing methods can’t keep up. Cash or revolving credit may not be best for acquiring equipment that depreciates quickly. Why make it difficult to upgrade and stay competitive? For equipment like this, paying to use it by financing it, rather than paying to own it, may make more sense.
Staying up to Date
Even if a business can afford to pay cash for equipment, doing that ties up funds that could be used for higher-value purposes. By broadening your financing mix, you can keep more of your cash working for you.
Using Cash for Stability, Recovery and Growth
Launching a new
Hiring new staff
Opening a second location
Launching new products
expenses and cash flow gaps
Taking advantage of a
short-term supplier discount
Investing in training
Remodeling hybrid or