Why financing is better than cash

If your construction business is in a position to expand, one of the first things you will need is to purchase more equipment. You look at the books and see that you have enough cash to buy the equipment outright, so why would you instead turn to heavy equipment financing? 

There are a couple of reasons why using financing to purchase your assets can be beneficial to your business, like the ones listed below.

The opportunity cost of cash purchases

Besides the ticket price of the equipment that you are buying, there are other costs associated with the purchase. When you finance a piece of equipment, those additional costs can be spelled out for you and easily seen in the interest rate that you would pay each month. However, when you pay with cash, those additional expenses do not stand out as much, but they are still there.

There is an opportunity cost that comes from purchasing equipment outright in cash. What this means is that you are losing out on the opportunity to use that cash for something else. This cash could instead be used to reinvest into the company and purchase new software, or an innovative tech in conjunction with using heavy equipment financing to get new machines. You could boost productivity and efficiency even quicker through this cash investment, helping to increase profit margins and regain your investment amount. 

Develop an emergency fund

Emergencies can happen without a warning and leave companies desperately trying to figure out what to do. Whether this is a machine breakdown, a labor shortage, an inventory mishap, or another bump in the road, one thing is for sure – you are going to want to have cash on hand to fix it. 

Heavy equipment comes with a big price tag, and if you pay with cash outright, it could take a while to earn enough profit to make that cash back. You may be short on funds and not be able to handle emergencies as deftly as you would like. Utilizing heavy equipment financing instead allows you to be able to reserve that cash for unexpected expenses. 

Better money management

With heavy equipment financing, there is a set amount of money each month that your company is responsible for paying. Having this set amount of money due can help your business manage its cash flow to ensure that it is operating at a healthy level and manage its budget. Losing a ton of cash all at once can disrupt other operations and cause irregularities that otherwise could be avoided with financing. 

Gives you options

When you are looking to buy equipment with cash, you may be limited with the number of machines you can purchase and may not be able to afford the newest technology. Heavy equipment financing gives you an influx of capital that can be used to buy multiple machines at once, prioritizing the features that your company needs. It opens up your options so you do not have to compromise, you can get what you want the first time around. 

Equify Financial 

When you are ready to buy new or used equipment for your company, save your hard-earned cash for something else, and turn to equipment financing instead. Our team stands ready to help you. Contact us today to learn more.