New Vs. Used in Trucking — Can My Business Support My Asset Payments?
*This post is from CMB partner Essex Lease. Visit them for flexible lending solutions.
For any kind of business growth, you’re going to need working capital to finance expansion, implement new strategies, and take on new employees. However, working out what your business can afford in the future can be tricky.
Asset payments can include a variety of monthly payments that a business must make in order to retain its assets, pay off loans or lines of credit, or meet lease payments. Expansion may include taking on new equipment to expand services or even paying for more real estate to open new branches. This means that asset payments are likely to grow as you grow.
In this article, we’re going to take a closer look at asset payments and how they relate to the kinds of assets you should buy as a trucking business. Take a look below to learn more about new and used equipment in trucking and how your asset payments may vary.
What Are Asset Payments?
Asset payments refer to a number of different aspects of monthly payments, including rental payments, interest payments, and depreciation payments. When you purchase or lease an asset, like a piece of equipment, you pay monthly to meet the initial cost or rental fee but also will likely pay interest on top of it.
If you own the asset, you also pay what is known as depreciation payments. These are the payments that represent the gradual expensing of the cost of an asset over its useful life. Depreciation is a common factor that businesses assess when deciding whether to spend their money on new or used equipment, as it affects how much of the initial expense you will get back when it comes time to sell the equipment.
New Vs. Used Equipment in Trucking: How to Make the Decision
When it comes to buying new equipment, a decision often needs to be made between new and used options. There are, of course, benefits to both kinds, but each will have a different impact on the amount you’re paying for your assets each month.
In the table below, you’ll see the factors that need to be taken into consideration when choosing between new and used equipment.
Trucking Equipment Comparison
Accessing the Assets Your Business Needs
So, what does all of this mean for your asset payments as a business? How can you access the assets that you need and ensure that your business has the finances to keep up with payments? Below are a few steps you should take to ensure that your business can support your asset payments in the long run.
#1 Create a Budget
This is probably the most obvious step we could have included in this list, but there is no easier way to get a handle on your finances than to make a budget and stick to it.
Begin by including all sources of income and all of your outgoings. The money that is left over is, essentially, all you have left for growth. By creating a budget and regularly reviewing and adjusting the budget, you can work out where you’ve got money to spare, what monthly payments you can afford, and where you might be able to cut down on costs.
You can also monitor your monthly cash flow to see when it may dip and when it may increase. Getting to know your finances is the first step to growth and increasing the assets your business owns.
#2 Build Up an Emergency Fund
An emergency fund covers any kind of expense or financial challenge you may encounter. This might be when a crucial piece of equipment suddenly needs repair, having to take on agency staff to cover illness, or needing to lease a specific piece of equipment for a special project.
#3 Prioritize Your Payments
Making your repayments the priority will give you the control you need over them. Ensure that you meet all your crucial obligations before spending on anything extra, and give important status to the asset payments that have the most impact on your business, i.e., the payments on an essential piece of equipment!
#4 Build a Relationship With Your Lender
Lastly, one of the best ways to ensure that your business can support your asset payments is to build a rapport with your lender. This will benefit you when negotiating your contract and if you ever need to renegotiate. If you’ve got a relationship with them, they’re more likely to allow longer repayments or be flexible with repayment amounts.
Asset Payments With Essex Lease
At Essex Lease, we can help you get your hands on the assets that you need with a number of financing options. Our equipment financing options include:
- Equipment line of credit
- Asset-based lending
- Equipment rentals
As a business, we’re committed to the success of all our clients, which is why we offer many ways to finance your growth. If you’re a business in the Calgary area, then Essex Lease is your best choice for equipment financing options.
Unlike banks and other traditional financial institutions, we are all about relationships. We look at each of our clients as more than facts and figures, and while we will take your finances into account, we want to work with you rather than just wait for your repayments in our account each month.
So, what does this mean?
First and foremost, it means that as a lender, we’re not just going to look at your financial history and credit score when going through the approval process. We will also take your character into account. We’re more understanding than banks and know that businesses often go through financial blips that shouldn’t impact whether you get the opportunity to grow and expand.
Secondly, it means we’re always flexible with our repayment plans. We want our financing options to suit you, which means we will work with you to create terms that suit both of us. If you’re looking into whether your business can support your asset payments as you try to expand, then Essex lease should be your first call.
Conclusion: Can My Business Support My Asset Payments?
There are many ways that can help you determine whether or not your business can support your asset repayments. However, the key to managing your assets and finances in the most efficient way is knowing your finances back to front and choosing the right lender.
With Essex Lease, we don’t just want your business; we want to build a working relationship with you, so we’re going to ensure that your business can support your payments and give you the opportunity to grow. Your success is our success, too.
Contact Essex Lease today to find out more about our equipment financing services and how they can benefit your asset management.