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Should Companies Lease Or Buy Forklift Equipment In Today's Economy?
Should Companies Lease Or Buy Forklift Equipment In Today's Economy?
As the economy slowly recovers from the depths of the recent recession, small businesses are still licking their wounds.
Nampa,
ID,
United States of America
(prbd.net)
28/01/2013
Cash, Credit and Small Business Growth
As the economy slowly recovers from the depths of the recent recession, small businesses are still licking their wounds. For several years, there has been a severe shortage of credit and financing for the needs of small businesses. Growing a small business consumes cash. A successful small business growing fast consumes cash fast.
Working capital is always an issue for small companies. The experiences of the past few years have taught them some painful lessons. One of the most important of those lessons is to conserve cash, and use credit carefully.
Acquiring Capital Equipment
Many small companies rely heavily on specialty equipment to run their businesses. Forklifts are an example of these machines that are essential to operations. In acquiring a new forklift, the question is asked, should companies lease or buy forklifts?
Direct Ownership
There is a sense of pride in owning your own equipment. The key issue is whether it makes sense. Cash is king in a small business. Buying an expensive piece of equipment consumes cash for a down payment. Monthly payments for principal reduction and interest consume more cash. As owned equipment ages, maintenance costs mount. Safety and technology are major considerations in such a purchase. The rapid changes in technology can mean that purchased equipment is obsolete well before it is paid off or depreciated. Older equipment can also present safety hazards if maintenance is not fully maintained. Debt acquired in the purchase of machinery like a forklift can affect the overall credit standing of a company.
The Lease Alternative
When credit and bank loans disappeared during the recession, many companies were able to acquire the equipment they needed using equipment leasing companies. Many manufacturers provide leasing facilities to aid in the sale of their machines. There are also numerous third party leasing companies. These companies generally specialize in certain types of equipment. Leasing requires no or very low upfront cash. Monthly payments are usually lower. After a lease period, lease equipment can be easily replace with newly leased equipment. Maintenance problems are kept to a minimum and the latest technology is available in new, leased equipment.
In both purchase and leases there are important tax issues that change based on current laws. How these tax issues affect a small company have to be determined based on that company's specific financial situation.
While every company's financial situation differs, there are pros and cons to either buying or leasing equipment needed for your operations. Careful consideration should be given to which is best for your company.
Media Contact Information:
Ryan Hill
1905 Madison Ave
Nampa, ID 83687
(800) 327-7741
info@dillontoyotalift.com
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About
While every company's financial situation differs, there are pros and cons to either buying or leasing equipment needed for your operations. Careful consideration should be given to which is best for your company.
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