Essential Tips For Equipment Leasing And Finance

Should you finance or lease business equipment?

Although both options help break down the overall cost of business equipment into smaller amounts, they are very different in how they’re set up.

If you decide to finance your equipment, you own it outright because you are purchasing the equipment and spreading out the purchase price over several years. You maintain ownership during and after all the payments have been made.

When you lease equipment, the lender owns the equipment and you’re paying for the use of it. Now there are different types of leases so it’s important to understand when you should use a capital lease versus when to use an operating lease.

When you decide what type of equipment your company needs there is much more to consider than overall costs of buying or leasing, you also should consider maintenance, tax deductions, flexibility, etc. Here are seven key tips to consider when it comes to business equipment financing & leasing.

Still, don't fall into the trap of avoiding equipment purchases simply because the economy is volatile. The right equipment leasing can improve your processes, productivity, capacity to innovate and bottom line. But to get those results from a major capital investment, you need an investment plan that addresses both your short- and long-term needs. Not only will you save time and resources, but you'll also avoid costly quick fixes.

1. Assess your business reality

It is important to understand your objectives. Are you looking to increase productivity? Will this new equipment make you more successful in the marketplace? Will it help you stay ahead of your competitors? Can you upgrade instead of buying new equipment and still get better performance?

Be sure you have answers to these questions before you buy. Avoid being influenced by aggressive marketing campaigns that make unrealistic claims.

2. Get an external point of view

Depending on the scale of your investment, it may be worth working with an external consultant who can ensure you make the most of your purchase by helping you assess your needs. Initially, you'll be looking at important factors such as capacity, employee usage and current resources. The most common practice is to do a cost-benefit analysis, which helps you justify your purchase and determine the pros and cons.

If you're in manufacturing, you may use an asset utilization ratio, which measures your ability to get optimal results from equipment and other assets. The premise is that more efficient equipment will give you better results.

3. Plan your cashflow and expenses

Negotiating the structure of your loan will allow you to better plan your regular expenses and ensure you maintain a healthy cashflow. As our equipment finance is usually provided at a fixed interest rate, all payments in the term can be planned well in advance. We offer loans for terms up to 60 months, providing plenty of room for you to balance the expense of your equipment with your business's income.

This puts you at a massive advantage, adding some certainty to your ever-fluctuating SME finances.

4. Keep your equipment up to date

One of the strongest benefits of equipment finance is that it can provide you with the means to make sure you have the latest and greatest products you need to work with at all times. With an operating lease the possibility of equipment becoming out-of-date is nothing for you to worry about.

With equipment finance, you can acquire the most current technology on the market without having to worry about throwing away your capital on something that may be obsolete in a year or two.

5. Combine your finance solutions

Connecting your debtor and equipment finance facilities will allow for even greater flexibility in your operations. Debtor finance options allow you to receive advances on your outstanding invoices helping you pay your workers, while our equipment finance options will keep the gears turning in your less sentient employees - your machines.

Why choose CMS?

CMS Funding has been providing equipment leasing and commercial financing services for over 20 years. Our management team has consistently helped large and small businesses acquire the capital needed to increase their productivity and sales while keeping an eye on the bottom line.

At CMS, customer service is the number one priority. Our goal is to help our customers by providing the finest and fastest leasing and financing services available. CMS has a trained staff of professionals who are available to consult and aid vendors and lessees with their leasing questions. Our motto is “Whatever it takes!”-whatever it takes to please our customers and make the funding process easy and hassle free. We are committed to customer service!

Each client is assigned a funding representative, a team manager and an administrative contact to service each account. Traditional/bank financing options can feel like you’re lost in the machine, our service-focused team will be there through the whole process.

We offer a variety of funding programs at competitive rates to satisfy the needs of all our customers. Programs such as deferred payment, 12 month step-up, seasonal plans, etc., can be tailored to an individual company’s specific industry needs.