Be prepared when purchasing equipment, is one of our number 1 top tip we say to all our customers. We understand time spent on planning and evaluating is time away from other things, however it will ensure the whole process goes as smooth as possible, and you will be thankful you took the time at the beginning, rather than facing roadblocks and uncertainties down the line.
We want to discuss the importance of how to be prepared and getting a head of the game when purchasing equipment. It is no secret that it is a strong used equipment market, this is a result of the delayed build times for new equipment with some new builds taking in excess of 12 months.
If you buy under pressure there is a strong chance you will over pay which can affect your cashflow, if you buy from an auction site don’t go over your cash or finance budget as most auction clauses are very clear, once you commit to the purchase, it’s yours.
So how can you be prepared when purchasing equipment, sit down with your team and work out what up-coming projects or jobs you have in the pipeline and what additional equipment you might need every month/quarter/year.
To be prepared when purchasing equipment, it is essential to involve your entire team in a comprehensive planning process. Start by reviewing upcoming projects or jobs in your pipeline. Assess the nature and scope of these projects to determine the types of equipment required to efficiently complete them. Consider not only the immediate needs but also long-term requirements, as this will influence whether you opt for purchasing or leasing equipment.
Next, analyse your projected income for each period – monthly, quarterly, and annually. This financial forecast should be realistic and take into account both the best-case and worst-case scenarios. Based on these projections, set a clear budget for equipment expenditure. It’s crucial to establish maximum spending limits to maintain financial health and avoid overextending your resources.
This will allow you to set a budget based on your projected income and allow you to set maximum spending limits when purchasing, this applies to both cash and finance buyers.
Most cash buyers will use their business working capital to purchase equipment, when doing this, you want to make sure you have enough cash coming into the business to replace the amount you have spent on the equipment purchase. Finance buyers will usually work with their finance brokers and banks to obtain pre-approvals and set limits, again, you will still need to make sure the business has enough cash coming in to cover the monthly payments.
Having an equipment purchase plan and knowing your cash budgets while having pre-approval limits will help give you the best chance of not purchasing under pressure and capitalising on used equipment ready to go to work immediately.
If you want help getting prepared when purchasing equipment or If you would like to know more about setting a plan or obtaining a pre-approval (https://chevronfinance.com/apply-now/) for an upcoming purchase, please contact either your Accountant or Equipment Finance Expert today!
Chevron Finance proudly supports those across Brisbane, Melbourne, Sydney, Perth and wider Australia with reliable machinery finance solutions, founded on flexibility and transparency. With over 20 years of experience in the field, we are backed by the expertise and insights that allow us to provide best-in-class, tailored solutions to our valuable clients. Chevron Equipment Finance was established to provide a more personalised service to meet the needs of growing small and medium businesses that have been under-serviced by their bankers for years. We pride ourselves in acting with a sense of urgency in everything we do and our can do culture ensures service and results we can be proud of. https://chevronfinance.com/
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