Can Cash for Equipment Slow Your Growth?

  June 13, 2018

  Read Time: 0 MIN 52 SEC

Did you know that small businesses are four times more likely to describe their business as “growing” if they finance equipment over paying cash? Here’s why:

Equipment depreciates, meaning that as it loses value you really have to ensure you are getting paid for its use to drive return on investment. If you pay cash and typically are only going to get a five or seven-year useful life from the asset, at the end of term you have 100% equity in an asset worth only 15-20% of your investment.

If your cash is tied up in fixed depreciating assets, it is not being invested in areas that create stronger return.

Isn’t the idea of investing cash to see the value of the investment grow? If your cash is tied up in fixed depreciating assets, it is not being invested in areas that create stronger return. Or put more simply, you’re not growing as much as you could be.

Companies that deploy equipment financing as a real strategy reap the following benefits:

  • Stronger and more predictable cash flows
  • More cash on hand for higher-return investments
  • They use newer equipment, driving efficient operations
  • They have fewer equipment failures
  • They have lower employee turnover (equipment operators prefer newer equipment without equipment failures)
  • Easier to bid on and scale new business opportunities because expenses more closely match revenues
  • They’re growing!

At LEAF, we make equipment more affordable and help you leverage other financial resources for growth. Our customized finance solutions solve real problems – like preserving your cash for higher ROI activities.

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