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Financing Equipment – What you must know!

Leasing Equipment - Manufacturing Equipment
Financing Equipment can be a great way to get the equipment you need to sustain your productivity and:

  • Sustain your competitive advantage
  • Ensure you can compete in an increasingly cut throat global marketplace
  • Save working capital
  • Better manage cashflow
  • Keep abreast of changing technology

Financing Equipment - Get it wrong and it can be expensive!

However, if you get it wrong or choose the incorrect product or structure, it can be expensive!

The benefits you hoped to achieve can be obliterated!

The situation is even more complex where:

  • Multiple pieces of equipment are involved from a range of suppliers
  • All or part of the equipment is coming from offshore suppliers
  • Installation and commissioning are involved – leading to a time-lag before the benefits begin to be derived

When considering Financing Equipment critical elements to consider include:

The Equipment Finance Handbook Free Download

Supplier reputation and ability to deliver!

When it comes to Financing Equipment a critical element to consider is the supplier reputation, experience and ability to deliver.

Whilst price is an important consideration:

  • What level of support do they provide?
  • Do they have local representation?
  • Who can assist when it comes to installation and commissioning if problems arise?

This is particularly important for larger or more complex pieces of equipment.

Financing Equipment - Align Payments to your cashflow!

Too often this is where the wheels can fall off and significant problems occur!

When financing equipment, it is important that, just like other forms of finance, the finance is aligned to your cashflow. That is; the finance is structured to allow for things such as:

  • Installation and commissioning
  • Other financial commitments
  • Seasonality
  • Etc.

Structuring facilities to a client’s cashflow is something I truly enjoy – getting the Finance to actually work for the client and not the other way around!!!!

Financing Equipment by Private Sale

If you are purchasing equipment from a Private Vendor an inspection of the goods will be required before payment can be made.

If there are multiple pieces of equipment involved, invoices need to be provided for each piece of equipment.

Importing Equipment

If you are importing equipment from offshore you may require a Letter of Credit to be established as part of your Finance facility.

In a global marketplace this is becoming increasingly common as businesses seek to source high quality and competitively priced equipment from offshore.

In these circumstances, we can arrange a Letter of Credit which converts to a Leasing Facility on inspection of the goods when they land in Australia.

Given the complexity involved around documentation, to avoid delays and frustration, it is critical to involve a specialist to assist.

Seek Accounting and Tax Advice

Finally, before Financing Equipment it is important to seek input from your Accountant to ensure from an accounting, structure and tax perspective the purchase will provide the maximum benefit for the business.

This step is something that helps avoid expensive mistakes and later regret!

Each business is unique, and it is critical that the structure and product are tailored to your specific circumstance.

It may only involve a quick phone call, but it is something I encourage all my clients to do before Financing Equipment!

Summary

Assisting clients with Financing Equipment is something I love! No two projects are the same as every business and their circumstances are unique!

Yes, it can be complex and if the right guidance is not provided, it can be expensive – but that is why you involve a specialist.

In my next post I will outline the actual steps involved when you are looking to Finance Equipment.

In the meantime, if you would like to learn more about Financing Equipment and how I can assist, don’t hesitate to give me a call!

Sharon Piening - The 500 Group

Sharon Piening

Sharon Piening - The 500 Group

Sharon Piening

Highly experienced Equipment and Motor Vehicle Finance Specialist. I love working with my clients and helping them navigate the complex world of equipment and motor vehicle finance.

Sharon Piening is a credit representative (474698) of BLSSA Pty Ltd ACN 117 651 760 (Australian Credit Licence 391237)

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