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Conveyors & Manufacturing Equipment: How to Decide Between Buying or Financing

April 28, 2021

Conveyors and other manufacturing equipment are necessary when you want to make your products as efficiently as possible.

To manufacture your products as efficiently as possible, you will want to purchase all of the conveyors and equipment you need as soon as possible. If you don’t have the cash required to purchase the equipment outright, then equipment financing or leasing is an option. If you are undecided on whether to opt for equipment financing or purchasing with cash, consider the advantages and disadvantages of each option:

Stay Out of Debt:  If you have plenty of cash reserves, it might make sense for you to purchase the conveyors and equipment with cash. A one-time payment might be the best option for you when you have the money on hand.

Build Your Credit Score:  When you choose equipment financing you will have the advantage of boosting your business credit score. Making timely payments can help you establish a stellar reputation. By building your credit history now, you will be able to qualify for larger loans in the future to support your growing business.

Add New Equipment: When you purchase equipment in cash, you will have the benefit of staying out of debt and owning the equipment outright. However, making a big investment often constricts the cash you have on hand, making it more difficult to add more equipment. If you plan to purchase additional equipment in the future, consider opting for equipment financing or leasing.

Avoid Interest Payments:  When you purchase manufacturing equipment in full, instead of leasing or financing, you will be able to avoid paying interest. A small to moderate amount of interest is added onto the monthly payment and can add up year after year. If you would rather own the equipment outright, for the lowest total cost, then paying in cash is likely the best option.

Build a Cash Reserve:  Buying conveyors and equipment with cash might seem like the most sensible option, but it can make it difficult for some businesses to operate month after month. Paying cash for your conveyors and manufacturing equipment reduces the capital you have available. You might find yourself in a dilemma if unforeseen circumstances occur in your business. When you choose financing or leasing, the low monthly payments will make it easier to pay for other business expenses.

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