Part Time CFO Services | Wanting To Buy Vehicles and Assets?
Part Time CFO Services | buying equipment and vehicles
One of the occurrences that regularly happen a business, is the need to make asset purchases says Part Time CFO Services. Business owners either need to replace equipment, by vehicles, or upgrade equipment in their business to provide better products or services. In order to do this efficiently, effectively and without affecting their cash flow too much, business owners should ask several questions to help them determine the answer.
The first question that business owners should ask, is should they plan on financing equipment rather than financing operating capital? The answer to this question is itís always easier to finance assets says from CFO Services. The number of opportunities for financing for assets, are greater as well as much easier to qualify for. There is virtually no regular opportunities for financing operating capital, and the opportunities that do come up are much more difficult to qualify for.
The second question that business owners should ask is what type of loan in Canada exists specifically to help small business owners? Who part time CFO services says that Canada small business financing loan. This is a loan that will lend business owners up to a maximum of $350,000 in order to buy assets like equipment and vehicles, it is much easier to qualify for because the federal government is acting as the guarantor, effectively backing that loan, so businesses who have been denied traditional financing are able to qualify for this one.
The third question business owners should ask when considering asset purchases in their business, is how does this compare to manufacture financing and leasing options? Part time CFO services says that Canada small business financing loan is base plus prime which is 4+3% equaling 7% currently, which is comparable to create a leasing opportunities which is as good as you can get. Leasing is only a secondary option, because the rates will never be as good as this, typically being 10 to 15% or more.
The question business owners should ask when considering their purchase, is how do manufacturers and leasing companies attempt to disguise their rates? Part time CFO services says that many business owners do not believe it when they are told that theyíre not going to be able to get better financing than 7%. The reason they donít believe it is because they see financing companies offering lower rates than the regular basis, sometimes even offering 0% financing. What business owners need to realize is that 0% financing is a lie. Business owners need to be aware that leasing companies often disguise their rate with additional fees such as financing charges and application fees. If business owners see that they can get a lower price by purchasing the item in cash, they should be alerted to the fact that that higher price for the financed version is actually the cost of the financing. They will be able to easily determine the right for themselves if they ask these three questions: how long is the term, what are the monthly payments, and what would the item cost if it cash.
Part time CFO services | buying equipment and vehicles
Business owners are ready to make asset purchases in their business, part time CFO services says some of the most important things that they can do in order to help them make that purchase is research. By asking some very simple questions about financing options as well as whatís the best purchase for them would be, with that they should buy brand-new equipment and vehicles or used equipment and vehicles, business owners can make the best decision for them and their business to minimize the effect on their bottom line and grow their business.
The first question that business owners should ask their bank is how does the age of the equipment or vehicle affect the length of the loan? Part time CFO services says many business owners are not aware of how banks calculate the term of the loan. What the bank does is calculate the useful economic life of the vehicle or equipment, and then ensure that that loan is paid back before the end of that life. The reason they do that is in case a business owner fails to pay back the loan, the bank will have something of value to repossess. It wonít do the business owner any good to finance something that will not have value before the loan is complete.
The second question that business owners should ask their bank is can monthly payments on new equipment and vehicles be higher than the ones? This answer is less of a surprise says part time CFO services, because since a business owner has a longer term on a brand-new piece of equipment or vehicle, the monthly payments are lower. As a consequence if the loan is for a used equipment or vehicle, they will have a shorter time to pay back so the monthly payment is higher.
The third question business owners should ask when considering purchasing assets for their business is how does increased maintenance and fuel cost affect monthly cash flow? This is a variable that business owners donít often take into consideration when they are considering buying used vehicles and equipment, says part time CFO services. But it is very important one. Chances are the reason why this equipment is for sale, is it was causing its previous owner too much and maintenance costs. A business owner can do some quick research on that make and model to determine how much maintenance equipment of that age usually takes. Then business owners should at that price onto their monthly payment. If it is a new piece of equipment, there is usually no maintenance required, or that maintenance is covered in under warranty.
Asking all of these questions, business owners can make the determination that buying used equipment or vehicles are much less attractive than they initially seem because of their lower price tag. Once they achieve financing, the best bet for business owner is to buy brand-new vehicles and equipment in order to serve their business for the longest amount of time.