Part-time CFO services | Financing Used Assets?
The biggest problems business owners and get a face today is that 50% of all businesses that are in operation will close their doors within five years as practicum CFO services. The most troubling part of that is that 29% of those failed businesses say the reason why that they had to close their doors was they run out of cash. There are several things that business owners can do in their business to avoid that problem. Many business owners run into this problem and they go to buy equipment or vehicles in their business, and when it comes to purchasing assets in their business how they go about doing it to can make a huge difference to the cash flow in their business.
One of the first things that business owners should remember to do when they are making an asset purchase says part-time CFO services is that they should always try to finance their purchase. The reason for this is if they use the cash thatís in their business to finance the purchase, this puts them at risk for running out of money later. Since businesses running out of money is at the top three problems and businesses in this country, doing everything in their power to avoid that should be the main goal of all businesses. Since finding financing opportunities for asset purchases is far more possible and easier to qualify for then finding financing opportunities for operating capital, this is the way that business owners should proceed.
For businesses that are unable to qualify for financing, not all hope is lost says part-time CFO services. This is can always apply for the Canada small business financing loan. This loan can give business owners up to $350,000 in order to buy assets such as equipment and vehicles. The reason why this is easier to qualify for, is that the the federal government has backed that loan, acting as a guarantor, so even if businesses have been turned down for financing, they may be eligible for this loan.
Some business owners believe that leasing may be a great option, because they see extremely low leasing rates being advertised, but business owners need to be very wary when looking at leasing, because often leasing or manufacturing companies disguise their rates by leader adding application fees or financing charges. Three very important questions business owners can ask says part-time CFO services when they are determining if leasing is a good option for them is how long is the term, what are the payments, and what would the price be if they paid in cash.
By successfully achieving financing options, business owners will be able to go ahead with their equipment or vehicle purchase, knowing that whatever decision they make, will have the lowest effect on their bottom line. By using financing as a tool, it can keep the cash flow in their business positive, and minimize the negative effects to their bottom line.
Business owners believe that by saving money through buying used assets like equipment or vehicles, they will be able to minimize the effect on their bottom line says part-time CFO service. Business owners can easily determine if this is the right decision for them by asking a few simple questions to their bank and doing some research.
The first question that business owners can ask their bank to determine if buying used vehicles or equipment is a good option for them, is how does the age of the equipment or vehicle affect the length of the loan. Business owners may not realize how banks come up with the term of the loan, but part-time CFO services says that banks calculate this by figuring out useful economic life of that asset, and ensuring that the loan is paid back before the end of that life. That means for used equipment, they will have to pay back that loan quicker than if it was new. This is not desirable for businesses, because the centre they have to pay back the loan for hire their monthly payments are going to have to be. In order to minimize the effect on their cash flow, business owners should purchase new equipment or vehicles.
The other variable that business owners should take into consideration when they are deciding between new equipment and vehicles are used vehicles, is does this equipment have maintenance costs attached to it. New equipment often doesnít require any maintenance, or the maintenance or requires is covered under warranty. Used equipment is less likely to have warranty and more likely to need regular maintenance. Business owners should do some research and find out what type of maintenance is required to that equipment, how often that maintenance is required, and how much money it costs. Part-time CFO services says by adding this monthly cost to their monthly payment, they can find out the true cost that they will be paying regularly for this equipment.
Research, business owners should also find out how often that used equipment or vehicles break down. It should be easy to find, and once business owners know that, they can figure out how costly the repair bill will be. They should factor that in to their monthly fee, as well as figuring out how costly that equipment failure will be to the business. Equipment failure usually means lost production time and wasted employee wages.
The last variable that business owners should consider deciding if used equipment is an economical option for them, is how this looks to their customers and how it affects their brand. Part-time CFO services says business owners may not realize it, but customers may judge your brand if a business owners use the equipment or vehicles. They may be seen as less serious, or not as thorough at their job and may also communicate unconsciously to a customer that the company is in the financial problems. For all these reasons, it is often in a businesses best interest when theyíre making asset purchases to purchase brand-new equipment and vehicles.