Both large and small businesses use equipment financing as one of the most important ways to invest in capital while managing cash flow and the company’s balance sheet.
Equipment financing allows companies to acquire equipment while avoiding many of the uncertainties often associated with new equipment acquisition.
Companies may choose to finance equipment for many reasons including:
Improved cash flow
Businesses often cite cash management as the number one reason to finance. No down payments or upfront costs, combined with lower monthly payments, allow companies to preserve capital to use in daily operations or other aspects of their business.
Improved cash forecasting
The amount and term of the payments are predetermined, allowing businesses to prepare accurate forecasts and budgets.
With equipment financing, you have the ability to finance the complete solution, including equipment, software, installation, training, maintenance and other services into a single transaction. Companies can also upgrade equipment or add services throughout the term.
Potential tax advantages
Certain finance products may be eligible for tax-deductible payments and other tax-relief possibilities. This information does not constitute tax advice. Consult with your tax advisor to determine how to use equipment financing to take advantage of expensing and depreciation tax savings or visit www.irs.gov.
Off balance sheet financing
Purchasing equipment often adds debt or reduces cash on a company’s income statement. At VGM Financial Services, an operating lease does not require you to add a liability or reduce your working capital, thus improving reported earnings and increasing return on assets. Please consult your accountant to see if this is a viable alternative for your business.
Preserved bank lines of credit
Companies utilize financing to keep the business running. Equipment financing is an additional source of financing and does not tie up or reduce lines of credit established at banks or other financial institutions.
Flexibility and convenience
Equipment financing can customize a finance solution specific to your unique budget. Not only that, the application process is quick and easy allowing you to respond quickly to business needs, industry trends and technological advancements.
Increased purchasing power
Financing may allow companies to acquire additional and/or higher-end equipment due to affordable payments and customizable solutions.