As anyone who works in manufacturing will testify, purchasing new equipment is by no means cheap. If we hone in on the topic of today’s article, forklifts financing, it starts to become even more obvious how costly it can be to fund such machinery.
This is where a more creative approach is required. Paying up-front for these tools is asking for trouble; it’s something that’s going to give your business some serious cash flow problems (unless you are one of the biggest companies in your field).
One of these creative options comes in the form of leasing. We will now take a look at some of the benefits of leasing forklifts, in a bid to save you and your business a lot of money for years to come.
The ability to conserve cash
The first benefit is probably the most obvious; the ability for your company to conserve cash. If you were to purchase a forklift outright, you would be paying tens of thousands, and potentially more in some cases, in cash. This is cash that could have otherwise been spent on different areas of your business.
With leasing, you are effectively renting. This means each month you are paying only a small amount, meaning that you have plenty left over to spend on further growth.
Have access to all of the mod cons
This is one of those benefits which a lot of people don’t expect. Again, when you purchase equipment, you tend to be tied-in for the long-term. Due to the fact that you have parted with so much money, it means that you almost feel committed to use the machinery for as long as it is useful for. As well as this, you are also financially committed – and it’s rare for a company to be able to constantly purchase new equipment (unless they are huge in size).
With leasing, this problem can be navigated somewhat. You can commit to a shorter lease, and by the end of it you can then opt for a newer piece of equipment. This often turns out to be a much better approach than hanging on to old equipment, which is difficult to sell towards the end of its working life.
The balance sheet factor
For those businesses that at least need to appear better on paper, this benefit is for them. As we all know, if you purchase a piece of equipment outright, it’s immediately regarded as long-term debt. In other words, it’s going to remain on your balance sheet for years to come.
If, on the other hand, you opt for a lease, this is simply regarded as an expense. To some people, the difference will only be aesthetic, but for others it could make or break their business. It might make it more attractive to potential investors, who are keen to look at balance sheets in a bid to identify a healthy business. The less debt you have, the more chance you have of appearing as one of these.