Part-time CFO services | New Versus Used Assets?
One of the problems business owners face their businesses today says part-time CFO services is they canít afford to pay for and canít qualify for financing in order to buy the equipment they need in order to do their job efficiently. There are several things that business owners can do to help themselves qualify, and make smart purchasing choices within their business in order to maximize cash flow. Even if they are having trouble getting financing for their assets, there are several things that they can do to increase the odds options they have if financing isnít option.
The first thing that business owners should do is look at all of their financing options available to them. Whenever possible, business owners should utilize financing as a way to free up their cash flow. Even if they have cash business, part-time CFO services recommends business owners do not use cash if at all possible. The reason for this is by utilizing financing, can ensure that the cash they have stays in the business. As businesses operate, they tend to run out of cash, which is one of the top three reasons why businesses fail in Canada today.
But what in the business owner do if they are not qualified for traditional financing asks part-time CFO services. There is a loan in Canada that exists specifically to help small business owners, and that is the Canada small business financing loan. This loan can be much easier for businesses to get because the loan is backed by the federal government. Even when business owners had been turned down for conventional financing, this may be a great option for them. It will give business owners up to $350,000 to buy their assets.
Many business owners assume that leasing can be a great option, especially when they see manufacturing and leasing companies advertise financing rates that are lower than base plus a prime, or even 0% financing. Business owners need to know that these extremely low leasing rates are fabricated. They often disguise the real rate with application fees, financing charges or just by increasing the price of the asset. By asking that leasing companies what would the price be if they paid for cash, entrepreneurs can figure out how much has been added to the price in a hidden rate. Other questions they should ask says part-time CFO service is what are the payments and how long is the term. By knowing the answers to those questions, business owners can figure out the right for themselves.
So before business owners even consider whether to buy used or new vehicles and equipment within their business, they should figure out how they can pay for those assets by figuring out there financing options. This way they can be assured that they are buying equipment that they need, while continuing to keep the cash in the business where they can use it as operating capital. This can help them avoid running out of cash and increases their chances of success.
Business owners often believe that purchasing used and equipment will help them keep costs down, and free up cash in their business because the price tag is lower says part-time CFO services. But they need to take several factors into consideration when they are making this decision, to discover if it is in fact cheaper to buy used vehicles and equipment instead of.
When business owners are considering used equipment and vehicles, they should ask the bank if they will be able to get the same length of loan as if it was new. Part-time CFO service says business owners donít usually consider the fact that the age of the equipment makes a difference to the term of the loan. Since the useful economic life of the vehicle or equipment is much lower in used, banks often require the loan to be paid back sooner. Therefore the terms of the loan are much shorter, in addition they are much higher payments. Business owners need to figure out if that smaller price tag they pay, is worth having to pay more money back sooner. Often is in the best interest of the business owner to pay back there loan in a longer., In order to maximize the cash they have within their business.
The second question that business owners to ask themselves when considering used vehicles or equipment in their business says part-time CFO services, is what will the increased maintenance and fuel cost be. Since the equipment and vehicles are used, they will require more maintenance time then brand-new ones. Business owners need to figure out how much time and money it will cost to maintain used. Once they figure that out they can add that about their monthly payment, to determine if it is financially sound to continue purchasing used assets for their business.
The third thing that business owners should take into consideration when purchasing used vehicles and equipment in their business, is what is the likelihood that these less reliable assets are going to fail? Fixing broken equipment is going to cost the business owner time, cost the business owner money, as well as cost extremely valuable production time in their business. Chances are, the staff will also not be productive while this equipment is down, costing them staff time as well cautions part-time CFO service. Business owners need to figure out what their monthly payment is plus increased operating cost plus the cost of downtime as well as fixing the broken equipment. Once they know all of these factors, they can determine if used is a better option than new.
However, there are some times when buying used equipment to can make sense says part-time CFO services. And this is for equipment that is not used on a regular basis. If it doesnít matter if the equipment breaks down occasionally, and if purchasing used makes more sense than continually renting that piece of equipment.