Published February 22, 2018 | Updated August 19, 2020
An independent survey of 3,214 businesses (with less than $50,000,000 in revenue) that make at least two equipment purchases per year revealed:
- Companies that pay cash for equipment keep equipment longer
- Companies that pay cash for equipment have higher maintenance expenses
- Companies that pay cash for equipment have more equipment downtime
- Companies that pay cash for equipment have more employee turnover
Think about it – the longer you keep equipment, the higher the maintenance expense. Higher maintenance expenses typically mean that there are downtime expenses because of equipment failure. Older equipment is also typically harder or more expensive to repair. And while these events are occurring, small businesses are perhaps missing the single, most significant, negative impact.
The most damaging by-product of the “pay cash and run it ‘til the wheels fall off” strategy is not a rental expense, maintenance, or even the pain of cash flow spikes – it’s employee turnover. As a business, your single largest expense is most likely labor – your people. Finding good ones seems to be getting harder, and the cost of losing one and then finding another good employee is extremely expensive and disruptive. When your company uses older equipment that leads to issues of downtime and inefficient performance, employees leave.
82% of 7,226 equipment operators (from entry-level to advanced personnel in industries ranging from construction to IT) said current equipment was a major factor in their job satisfaction.
It’s no wonder the same research revealed that companies who paid cash reported higher turnover among equipment operators. Financing allows companies to stay on the cutting edge of technology, pay a simple monthly payment for a period of time, and replace the equipment at the end of the finance term with the newest model and technology in any economic environment. Executed in the right way, financing becomes a program to ensure your company and more to the point – your employees – have the tools to do the job.
When it comes to your employees’ satisfaction, think about your smaller-ticket equipment too. Many businesses don’t think about financing a few laptops or a used trailer, they only envision financing a larger purchase. But it’s these smaller items that are often the most impactful to an employee’s experience. From a financial point of view, they can add up to be significant monies.
The right finance partner can help. At LEAF, we make equipment more affordable. Our customized finance solutions solve real problems, such as ensuring your people have the tools to do their job.