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Benefits of Upgrading Your Equipment

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We are going to talk about the benefits of upgrading your equipment.

Below are some key expenses that relate to your current equipment, especially for industries such as construction, manufacturing, or transportation, it’s important to consider several factors that contribute to the overall cost of equipment operation operating;

  • Fuel & Oil – This is often the most significant recurring expense for operating heavy machinery or vehicles.
  • Repairs & Maintenance – When equipment is down for repairs, it’s not generating revenue, which can be a significant hidden cost.
  • Time – The time it takes to complete tasks with the equipment directly impacts productivity. More efficient equipment can complete tasks faster, potentially reducing labour costs.

Understanding these expenses is crucial for any business as it allows for more accurate budgeting and financial planning, and in making informed decisions – when you look deeper you may be surprised by the benefits of upgrading your equipment.

Based on the above expenses and comparing one truck, a used Prime Mover will burn fuel at 1.33Km/L while a new Prime Mover will only burn fuel 1.29Km/L which is a saving of c.4Km/L. Based on your prime mover travelling c.10,000 km per month at $2 per litre, that is a c.$2,400 net saving per annum. The life expectancy of a prime movers engine is c.1,000,000 Km, the cost of a new engine ranges between $50,000 – $80,000 plus standard serving requirements. Majority of new prime movers come with fixed price/free servicing for the first few years while they are under warranty which will help minimise the cost of repairs and maintenance. The last expense is time, this could be one of the most important expenses as it relates to income. How many times has your prime mover needed to be repaired because something has blown or broken and it has taken over a month to get it back on the road?! If your company is paid on 30 day payment terms and your prime mover earns c.$16,000 per month, this would have cost your business c.$32,000 in revenue.

Next we are going to quantify the above and show you how upgrading your used equipment can help increase your net profit. If you can’t wait and would like to know more about the benefits of upgrading equipment now?! Please contact either your Accountant or Equipment Finance Expert today!

Below we are going to help relate upgrading decisions to your business and offer an option to quantify. Below are some decisions to think about when upgrading your equipment;

Based on the above, every business has different circumstances to consider when upgrading equipment. To help quantify your decision, generate your businesses Profit & Loss statement and compare your current and previous financials years income, as well as expenses relating to the operation of your equipment (such as repairs and maintenance, fuel etc) and see if there is an opportunity to generate more income or save expenses from upgrading your equipment.  We hope you can see the benefits of upgrading your equipment.

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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