Published September 21, 2015 | Updated July 10, 2019
Diversifying is generally a good thing when it comes to stocks. But what about business equipment financing? Does your business leverage a wide variety of available financing methods? Or do you restrict yourself to just a few?
If your business is like most, it falls into the second category. But it pays to be part of the first. Here are five reasons why:
- Using Cash for Growth – Even if a business can afford to pay cash for equipment, doing that ties up funds that could be used for growth. By broadening your financing mix, you can keep more of your cash working for you.
- Staying up to Date – Technology changes fast, and some financing methods can’t keep up. Cash or revolving credit may not be best for acquiring equipment that depreciates quickly. Why make it difficult to upgrade and stay competitive? For equipment like this, paying to use it by leasing it, rather than paying to own it, may make more sense.
- Reducing Credit Exposure – Credit is one of those things that are better to have than need, but when you need it, you need it. Having multiple financing methods available lets you keep more of your credit lines open and ready. Not only does this prepare you for the unexpected, but lower credit utilization can also improve your credit rating.
- Managing Taxes – Depending on your situation, it may be advantageous to depreciate equipment year by year, expense it month by month, or take a lump-sum Section 179 deduction. Having a broad mix of financing allows you to manage your equipment acquisitions in a way that’s most favorable from a tax standpoint.
- Gaining Better Control of Your Budget – Some financing methods give you options such as deferred, step, and seasonal payment options to help you address business cycle fluctuations with a minimum impact to your budget.
Choice is power, so why limit your options? Take advantage of a wide range of finance options and get the flexibility you need to equip your business affordably and keep it growing.