Is now the right time for updating business equipment?

Given that COVID-19 has plunged the economy into uncertainty, it might seem like an odd idea for your business customers to be updating business equipment right now. There are certainly arguments in favour of postponing decisions and playing a wait-and-see game. Successful business owners, however, know that getting the timing right is important, and delaying now could see your business customers missing out on valuable opportunities. 

Why it’s especially important now to keep equipment up-to-date 

Your business customers’ equipment plays a vital role in helping them to achieve their business goals by earning revenue while, ideally, keeping costs as low as possible. Depending on their business type, they cannot function without, for example, their vehicles, manufacturing plant, agricultural machinery, medical devices, office furniture or computers. The more up-to-date they are, the more likely they are to increase their revenue and lower their maintenance costs. 

However, it’s important not to update just for the sake of it. Work out with them how much extra revenue or cost savings their new equipment will deliver, and compare it with the finance and usage costs. They need to see a positive outcome to make it worthwhile but in these particularly challenging times, they may also want to prepare for the bounce back to normality. If the economy bounces back quickly there may be a significant demand for new equipment, which could result in shortages. They’ll be sitting pretty if you’re all tooled up and ready to go. 

Now is a favourable time for equipment purchases 

As the 19/20 financial year draws to a close, it’s a good time to review your business customers’ equipment needs. You can take advantage of end-of-financial-year sales when equipment manufacturers are ready to discount their stock in order to meet annual sales targets. Understandably, there may be even more price reductions this year than normal. 

If they have already made asset purchases in the last year or decide to purchase soon, they might qualify for tax benefits from the revised instant asset write-off scheme. This allows businesses with an annual turnover under $500 million to write-off qualifying asset purchases with an individual cost of up to $150,000 as a tax-deductible expense in the current financial year, provided that the asset is first installed and ready for use between 12 March and 31 December 2020. 

Equipment finance could help preserve working capital 

Right now, though, they probably have extra demands on their working capital. They may need to continue paying their employees and creditors, while also working to keep the doors open. 

So, if you have clients looking to purchase new equipment without using their working capital, equipment finance could be a solution. There is a wide range of options, including: 

  • Finance lease 
  • Commercial hire purchase 
  • Specific security agreement (Chattel mortgage) 
  • Rental agreement 

Contact your Platform Finance broker for advice 

In some cases, you as their finance broker will have to work with their accountant to structure their finance so that not only are the tax deductions are optimised, but the initial repayments are also lower helping them navigate this uncertain period. 

The end of the financial year is approaching quickly, so if your business customers are interested in upgrading their equipment, pick up the phone and give us a call on 1300 88 77 54 today to take advantage of Platform Finance’s asset finance aggregation services. 

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