The world of construction is an expensive one. It often requires large investments in state-of-the-art equipment to ensure you’re staying competitive. And while outright purchases might make more sense in terms of simplicity - financing construction equipment can form an important part of a more convenient financial strategy.
In this guide, we’ll explore the benefits that can be extracted from construction equipment financing. Including improved cash flow management, and harnessing up-to-date machinery while avoiding huge upfront costs - financing has a wide array of advantages suitable for both established and growing companies.
Why Finance Construction equipment?
1. Better Cash Flow Management
To stay as competitive and as efficient as possible, acquiring cutting edge equipment is an essential part of a construction company’s operation. However, it can also place enormous strain on a company’s financial resources. This is why many businesses will turn to financing such as leasing and loan products.
Offering fantastic flexibility in terms of payment terms, these financing options can be specifically tailored to a company’s unique financial needs. By choosing to finance your construction equipment, you will avoid the large upfront payment and instead pay over a more extended time frame via manageable periodic payments. By paying periodically, a construction company will preserve their capital for other needs within the business. Financing ensures funds aren’t tied up in machinery, thus offering flexibility in allocating this resource elsewhere.
2. Tax Benefits
Tax advantages are a major drawcard when it comes to running a business. They are also another important reason why construction equipment financing is an important consideration to undertake. In addition to easing cash flow, exploring equipment financing can allow you to deduct monthly loan payments as an operating expense, thus reducing your taxable income.
By making these monthly deductions, your company’s tax liability will be significantly reduced, which in turn will lead to greater savings. However, it’s important to discuss the tax implications and benefits specific to your own financial situation with an accountant or tax advisor.
3. Harness the Latest Technology
In our ever-evolving, fast-paced world - keeping up with the latest tools is an ongoing challenge for construction companies. But with equipment financing, it’s made much more simple. Rather than continuing to use old, out-of-date machinery - financing enables companies to get the newest gear and technology thus leading to better and more efficient operations.
In the context of equipment financing, selecting a lease or a loan product is not just about saving money. It also provides businesses with the right equipment to do the best job they possibly can. To put it simply, by financing your next piece of construction equipment - you will be helping your company stay modern and competitive in a saturated market.
4. Productivity and Task Streamlining
Ditch the constant repairs or slow machinery by financing your construction equipment. By using a lease or loan product for your next big purchase, you can help keep the workflow of your business smooth and consistent. Updated equipment often performs better and faster, and in turn the chances of unexpected breakdowns are reduced significantly. Due to this - work on a site can continue without interruptions, overall assisting the productivity of business operations.
Additionally, newer equipment often has advanced features that can assist in task streamlining and shorter job completion timelines.
5. Quicker Investment Return
While undertaking a loan for construction equipment may be spread over a longer period of time, the benefits of the equipment, in terms of revenue and operation, are enjoyed immediately. By funding equipment via financing the return on investment is essentially accelerated and can help to position a business advantageously in a competitive market. Additionally, with finance, downtime in the company will become more rare, leading to the output and quality of the operations being significantly increased. Due to this, construction businesses can expect to reap a much quicker return on investment.
6. Flexibility via Asset Management
When running a business, flexibility can be hard to come by. So, when an opportunity arises for you to grab it - you’ll want to take it. Financing can often provide a variety of options at the end of the financing term. This can provide a very strategic way to manage your assets.
Simply put - at the end of a financing term, borrowers won’t typically be locked into a single choice. They will generally be provided with a choice depending on their current needs and market conditions. For example, if the equipment has proven invaluable and still holds significant utility - you can choose to buy it outright. However, if there is newer technology now on the market that better serves your requirements - you can choose to upgrade instead. Alternatively, if the equipment no longer aligns with your company direction - you can choose to return it. By financing, a business can be more adaptable, therefore staying nimble and aligning more closely with the operational and financial goals of the company.
7. Preserving Lines of Credit
By choosing not to exhaust your credit on a large construction equipment purchase, a business will be able to retain their resources for unforeseen expenses, emergencies, or other business ventures. When a business chooses to finance their construction equipment, this is a strategic decision to protect its existing lines of credit. In turn, this can demonstrate the business is careful with their funds and ensures its growth won’t be limited due to a lack of accessible funds.
Final Thoughts
If you’re a small business owner - construction equipment might be a high cost for you to consider. However, to take on more work and grow the business, it is an essential part of the process. In Australia, there are many different finance options available that make obtaining equipment possible.
Financing ensures businesses don’t overspend on equipment they may only need temporarily. It also requires a much smaller upfront cost compared to buying equipment outright. With a large suite of equipment financing options available in Australia, including hire purchase, operating lease, financial lease, and more - it’s important to do your research to ensure you are obtaining the right loan for your situation.
Finance Your Construction Equipment With Jade Finance
Limiting your loan options to just one bank or one lender is limiting your business growth and investment opportunities. Our team at Jade breaks those limitations by offering you more lenders, options, and chances to reduce your financing costs.
With most banks and lending facilities available to us, we can broaden your options to secure better financing deals that support your business. We will support your business beyond just one loan - as a respected client we can work with you to revitalise your operation with cheaper, more affordable finance options across multiple areas.
Elevate your construction equipment financing with our expertise. Call us today on 1300 000 003 or request a quick quote.
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