Part-time CFO services | purchasing hard assets
An extremely sobering statistic says part-time CFO services is that half of all businesses close the doors to their business within five years, and that 29% of those failed businesses say that they ran out of cash as the reason why they had to close. Business owners need to learn how to maximize their cash flow within their business to avoid running out of money while being able to make the decisions to purchase the equipment they need to continue operating.
One of the most important things that a business owner can do is maximize their financing as early on in the business as possible. The reason for this is part-time CFO services is because the longer a business is in operation, the greater chance they will run into a cash crunch potential, which makes an older business less attractive for banks to loan money to. Itís all possible, a business owner should maximize their financing with the initial purchase of their business. They should finance equipment whenever possible, because it is more possible for a business to secure financing on equipment than operating capital. The more money business is able to free up through financing, will free up that money they have already for their operating capital.
If a business owner has been in operation for a few years and they find themselves needing financing, and they are unable to qualify for traditional, a great option for them says part-time CFO services is the Canada small business financing loan. This has the potential to give entrepreneurs up to $350,000 to buy equipment and vehicles and their business. The reason why this is an option for businesses have already been turned down for other financing, is that since this loan is backed by the federal government, it is easier to qualify for.
A business owner should consider this option over affect your financing or leasing options, because the Canada small business financing loan has the best financing rate than any other institution. It is base plus prime which currently in Canada is 7% says part-time CFO service. This is the absolute best financing a company will be able to get. Even if the consider leasing, which may advertise 0% financing financing companies often disguise their true rate with application fees and financing charges. Business owners need to be aware of this, and know that they will never get better than base plus prime.
Once a business owner has figured out how to finance their purchase, the next question they often have is should they purchase new equipment and vehicles for their business, or used equipment and vehicles? There are several things to consider taking this choice is part-time CFO services, but almost overwhelmingly, the answer to that question is new is usually better. Business owners make often think that used is a more attractive option, because it comes with a lower price tag. The low price tag doesnít always mean best financing options, or most efficient equipment.
Their business within five years says part-time CFO service. Almost 1/3 of all of these businesses say that they have failed because they ran out of cash. Cash flow problems are a huge problem in any businesses. Business owners do what they can to maximize cash flow, and make smart purchasing decisions within their business in order to increase the amount of money they have their availability. One of the ways they do this is by purchasing used equipment and vehicles in their business. But is this the most efficient way of running a business asks part-time CFO service? There are several questions business owner should ask find out the answer to this question.
One of the first questions that a business owner should find the answer to when researching if they should buy new vehicles and equipment or used vehicles and equipment, is does the age of the equipment or vehicle affect the length of the loan? Business owners may be not surprised to find out the answer to that question is yes, but not in the way they think. Since use equipment vehicles have already depreciated in value, a bank will want to get their money back from that loan as quickly as possible, and therefore they will insist on much shorter terms than if it was a new vehicle or equipment. Business owners will want to avoid short loan terms, because they are harder to pay back in longer ones.
The second question that business owners should ask when they are thinking about making asset purchases in their business, is can monthly payments on used equipment vehicles be higher than new ones? Again says part-time CFO services the answer to this question is yes and of the reason for that is as banks need to have the loan paid back quicker, they also need to get more money back each month. Even though the asset may have been cheaper to purchase initially, the fact that they have to pay back money quicker, and a larger lump-sum can be devastating to a business.
Another question that business owners are going to want the answer to before they make their decision is how does increased fuel costs affect monthly cash flow? Business owners may not even take into consideration that used vehicles and equipment will have a higher maintenance to them. Brand-new equipment and vehicles often donít have any maintenance charges associated with them, and even if the use equipment has a low maintenance schedule, still more time and money a business owner has to put towards that equipment than a brand-new one. This to the higher monthly payment, and the shorter length of the loan, and it starts to add up very quickly. The final piece to the puzzle says part-time CFO services is taken into consideration that use equipment and vehicles are more likely to fail new ones. Fixing broken equipment vehicles takes time, which costs money costs money to fix, as well as costs business value will production time while your business is not producing, and neither are the employees.