Investing For Growth
In the April issue of The Mining Chronicle, Nick Aronson, General Manager of The Leasing Centre, discusses how companies can access cutting edge machinery without impacting cash flow. While the article talks specifically to the mining industry, companies from all industries can benefit from utilising a flexible finance solutions when acquiring equipment.
By Nick Aronson, General Manager, The Leasing Centre
Access to cutting edge equipment can offer mining businesses a major competitive advantage, enabling them to invest in modernising, streamlining and growing their operations. However, the key issue for most businesses looking to access new equipment is financing. While the majority of mining companies already have the necessary finance in place to lease large scale primary equipment, not all businesses are aware that they can benefit from similarly structured financing arrangements for mining support equipment, such as compressors, welding equipment and safety systems. While they are not the big ticket purchases, ongoing modernisation of this type of equipment can make a huge impact in boosting productivity and improving business efficiencies.
Mining equipment is not only expensive, but also depreciates quickly as new technologies come into play and new products hit the market. Financing both primary and secondary equipment has many business benefits over purchasing equipment outright, essentially paying for the future use and benefits of the machinery. This would be all well and good if it was guaranteed that the purchase would earn its keep, continuing to add value to the business in the long term. The reality is that equipment becomes quickly outdated as new innovations hit the market. In addition, mining equipment undergoes extensive wear and tear, needing to be replaced and upgraded regularly. Outright purchases can leave organisations lumbered with an end of life product while competitors are investing in newer machinery that provides them with operational advantages. One option here would be to sell the older product and reinvest funds in new machinery. However, it is worth noting that equipment depreciates quickly, leaving you with less to reinvest.
There is another option for mining businesses who want the flexibility to acquire the latest mining support equipment whenever there is a need. Having financing options in place for support equipment has many advantages. It allows businesses to spread payments over the useful life of the equipment, a bonus when managing cash flow. Just as important is what happens when the machinery comes to the end of its useful life. Under a rental agreement, mining businesses have the flexibility to upgrade or replace machinery at any time, ensuring that you are not left with a product that is outdated. This way, mining businesses can invest for growth – ensuring that they have the option to purchase market leading equipment that will enable them to develop and grow their businesses.
When it comes to putting in place a leasing agreement, mining businesses should look to work with organisations, such as The Leasing Centre, who specialise in financing mining support equipment. This will mean that they have access to flexible finance solutions designed to secure the machinery and equipment required for growth. The Leasing Centre believes every equipment finance strategy should be specifically designed to help bridge the gap between growth objectives and budget limitations, to ensure that mining organisations get the best investment for their business.
Key reasons why businesses should consider leasing for mining support equipment.
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Businesses are not required to find capital or outlay large sums of money up front when acquiring equipment
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Fixed, affordable payments over a period of time reduce the impact on cash flow management, freeing up funds for other areas of the business
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Upgrading equipment during the life of the equipment is simple. Businesses will benefit from the flexibility that upgrading offers as they are able to upgrade and replace equipment during or at the end of a leasing agreement, without facing the cost of disposing of old equipment
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The ability to upgrade equipment at any point in time keeps the organisation at the forefront of current technology
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Leasing offers the advantage of a faster return on investment. A manageable payment plan determined in advance helps businesses align cash flow with cost benefits of the equipment
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