Construction Equipment: Have You Considered Leasing?Posted by Factor Funding Co. on November 18, 2014
Running a successful construction demands that you have the right kind of equipment at your disposal. When you have equipment that you need to run your business, you can bid on more projects and increase your profits. However, buying jackhammers, bulldozers, cranes, cement mixers and other equipment upfront can be expensive. When you cannot afford to buy the machinery that you need, you can build your company and improve your chances for success by leasing the equipment that you need instead.
No Credit Risk
If you are new to the industry or your business has poor credit, you may not be able to get a bank loan to purchase machinery. Rather than let your credit become an obstacle, you can overcome your poor or lack of credit by leasing the equipment you need.
When you rent machinery, your credit may not be checked during the application process. If it is, it may not greatly play into whether or not you are approved for the lease. Many equipment leasing companies typically approve the application if you can put down a deposit and show proof that you can make the required payments on time.
Access to New and Updated Machinery
When you buy construction equipment, you often must use it for years, even when newer models that could make your job easier come out on the market. In fact, upgrading to newer models may be impossible if you have put a large portion of your company's money into purchasing machinery.
Leasing machinery, however, can give you access to the newer models that can make your job easier and faster. Many construction rental companies only rent out the latest machinery rather than old and outdated models. When you lease the machines that you need for your construction company, you can increase your workers' productivity and serve your clients better.
While it is true that you will have to make regular payments on your rental agreement, you may find that leasing is easier for you to afford. When you buy equipment, you own it outright. However, you are also responsible for the repair and upkeep of that machinery. When you rent machines, you often get repair and maintenance services as part of your rental agreement.
Making the rental payments themselves may also be a concern if you lack the cash flow right now to take on a lease agreement. However, rather than using all of your company's available cash to make these payments, you can factor your invoices to free up the money you need. Factoring can be ideal for renting construction equipment because:
- Factoring is fast and easy with an online application
- You avoid taking on debt that your company may not be able to afford
- You get the money you need to rent equipment in a few days' time, if not sooner
- Your company's credit is not at stake with factoring
- You avoid having to take out a bank loan to get new construction equipment
When you factor your invoices, you can keep making payments on the rented machinery without having to wait for your clients to pay their receivables.
No Long-Term Commitment
Some construction equipment is only needed for small and obscure projects. Even so, you need to have this machinery on hand for such occasions. Rather than put out a lot of money for something that you may only use once or twice a year, you can rent this machine instead. When you rent equipment that you may only use sporadically, you avoid the long-term commitment that comes with buying. You can use the machine as often as needed, return it to the rental company, and get your deposit back if the item was returned in good condition.
The success and profitability of your construction company depends greatly on the equipment you use for your building projects. You can grow your company and serve more clients when you rent the machinery you need instead of buying it.