Part Time CFO Services | Wanting Good Asset Purchases?
Part time CFO services | asset purchases in business
50% of businesses close their business within five years, says part time CFO services. And 29% of those failed businesses will give the reason for their business failure as running out of cash. Helping business owners increase their cash flow efficiently and effectively, can help increase business success in this country. Helping business owners make good purchasing decisions can help businesses efficiently operate their business, and get the equipment that they need to run those businesses.
Business owners need to know that the best ways that they can secure financing for their business is to finance equipment over operating capital says part time CFO services. The reason for this is itís much more attractive for banks to finance hard assets, because of the business owner defaults on the loan, then the bank will at least have something to repossess. Getting financing for operating capital is much more difficult and less common because itís a higher risk for the bank.
Business owners also need to understand that earlier in the lifecycle of their business that they obtain financing not only is it better, it is usually more possible. Whenever possible, business owners should obtain financing at the initial purchase of their business. The reason for this, is that they can use their leverage is a new business owner to get financing, you will help them save their cash for operating capital later. So business owners can make better decisions on purchasing brand-new equipment by using the financing that if secured in the beginning.
However this place will be too late for several businesses, they need to buy new equipment or vehicles and are having trouble obtaining that crucial financing says part time CFO services. Therefore, an option for them could be using the Canada small business financing loan. That loan will be able to lend business owners up to $350,000, enabling businesses to buy vehicles as well as equipment for the business. This is much easier to get because the federal government is the guarantor, so banks are much more apt to loan business owners that morning, and perhaps those business owners were unable to get conventional financing. It can be a good option for businesses who need to make purchases.
Many business owners who are not able to get conventional financing or qualify for the Canada small business financing loan, often think that leasing will be good option for them, and part time CFO services says that Canada, provided that the business owner is very aware when they consider leasing. The reason for this is leasing companies often hide fees such as adding on financing charges or application fees bumping up the rate. If business owners know that they will never be able to get leasing rates that are better than what their bank get them, they will truly only use that as a last resort. Business owners can figure out the rate of the leasing companies asking them the following questions what would they pay if they paid in cash, what are the monthly payments, and what is the monthly term.
Part time CFO services | asset purchases in business
Business owners are running into a cash as they operate their business, and believe that financing used equipment or used vehicles will help them maximize their monetary spending, says part time CFO services asking the following questions will help them determine if this is their best course of action or not.
How can less reliable vehicles, and equipment increase wage costs and steal business owners time? Part time CFO services says that most business owners do not consider this aspect when considering purchasing used vehicles and equipment. They donít take into consideration that used equipment will require more maintenance than brand-new equipment, and will have the potential to break down, when brand-new vehicles and equipment shouldnít break down at all. Fixing broken equipment not only takes time away from the business owner, and costs them more money it also halts the production in their business.
Causing the business to not be productive but also causing the staff to not be productive therefore a business owner is paying for the equipment, paying for the repair, losing money while there business is not being productive as well as paying their staff to stand around and do nothing. Business owners need to consider this cost when theyíre deciding if used equipment is the right decision for them.
The next question that can help business owners determine if used vehicles and equipment are the right purchase for them says part time CFO services, is how does increased maintenance and fuel costs affect monthly cash flow? Again this is another question that business owners rarely ask themselves when considering used equipment. It is most often more expensive to run, because of poor fuel efficiency for example. Business owners need to take into consideration the fuel cost as well as the operating cost when considering the price of used vehicles and equipment.
The third question that business owners need to ask when they are considering used vehicle and equipment, is how does age of the equipment or vehicle affect the length of the loan, and can monthly payments on whose equipment and vehicles be higher? Part time CFO services says that this is actually true. Business owners may assume that financing for used will be less because the cost for that equipment is less, but unfortunately banks often have a much lower length of the term for used vehicles due to their depreciation. A higher cost and lower term can be enough of a deterrent for business owners to avoid buying used vehicles, even though the price on a price tag may show a cheaper price than new. By taking all of the variables into consideration when theyíre making their decision, business owners can decide what is the right decision for their business that will not only help their business be efficient, but help them not fall into a cash crunch later on in their business by trying to pay back loans quickly.