Published June 12, 2019 | Updated July 01, 2021
With offices reopening, strengthening sales, and capturing new opportunities requires more than determination and stamina. It requires capital. Cash reserves are a precious commodity when starting or expanding new customer engagement because upfront expenses outpace how quickly you can collect on new revenues early in the relationship.
One of the largest of these upfront expenses is for equipment. From office technology to machine tools and delivery trucks to earthmoving assets, the equipment you depend on to help produce new revenues can require a strong early financial investment.
How can a business owner develop a long-term plan to gear up for opportunity and scale their business with confidence, especially in times like these? When you examine your history with equipment finance, you may find that you haven’t included it as a proactive and central tool for acting on your business strategies. But it can be.
For businesses with revenue-producing equipment connected to a contract:
If you deploy equipment that directly impacts how much product you can produce, your ability to grow is directly proportional to how much equipment you can have working for you. And how much profit you make on that production depends on keeping equipment costs affordable and predictable. There is no better way to preserve cash, manage a predictable cash flow stream, and align your commitment to an asset with your use of it than by deploying an effective equipment-finance strategy. Once you understand how you will use the equipment and for how long, equipment financing can help you easily budget for new production volume while reducing the short-term pains of starting a new customer contract. And taking this strategic approach can also help you reduce costs throughout the lifecycle of asset use.
For businesses expanding into new opportunities:
Revenues from a new opportunity can take time to reach a profitable level. It can take months to build up your brand in a new market, and the revenues might trickle for a while before the anticipated flood. But your expansion costs arrive starting on day one. From IT to fleet vehicles, upfront expenses can have a damaging impact on cash reserves unless equipment finance is built into the strategy from the outset. By working with a lender that understands the whole situation, you might be able to deploy a “step-up” payment structure with minimal payments for the first few months while you’re developing new customers. This is just one of the potential equipment finance structures that might help business owners more easily manage cash flows and preserve cash while waiting on revenues from expansion into new opportunities.
A model for the future:
Using equipment finance as a proactive tool to facilitate revenues is more than making your current situation more affordable. It’s a model you can use for future strategic initiatives, regardless of the economic environment. Building in the monthly payment structure into your forecast models can help you enter into new opportunities more predictably and with greater confidence.
At LEAF, we make equipment and technology more affordable and solve real problems, like giving you a model to pursue expanded revenue streams with confidence.