Should You Pay Cash for Equipment or Finance It?
Buying equipment outright can seem like the obvious choice. If your business has the cash available, why pay interest?
But there’s another question worth asking:
What could your business do with that cash if you kept it available?
Equipment financing can allow you to acquire the equipment your business needs while preserving working capital for:
- Payroll and operating expenses
- Unexpected repairs
- Inventory and materials
- New projects and contracts
- Additional equipment purchases
- Business growth opportunities
For example, if you have $250,000 available and need a $150,000 piece of equipment, paying cash may leave you with only $100,000 of working capital. Financing the equipment could allow you to keep more of that cash available while spreading the equipment cost over time.
That doesn’t mean financing is always the better choice. If you have plenty of cash reserves and the financing terms don’t make economic sense, paying cash may be the right decision.
The important thing is to compare the total cost of financing against the value of preserving your working capital.
The Bottom Line
The cheapest way to acquire equipment isn’t always the best way to finance your business.
Before writing a large check for your next equipment purchase, consider what keeping that cash in your business could be worth.
Ready to discuss equipment financing?
Have questions about your next equipment purchase? Contact EFS – Equipment Finance Specialists to discuss your financing options.
📞 (512) 888-5721
Contact EFS → click here to go to our prequalification page if you are ready to look at financing options.