How Important is Cash Flow when Leasing Equipment?

Cash flow is one of the core aspects that leasing companies need to know about for potential customers. Any small and medium sized business should know that cash flow – or access to capital – is what will enable a business to sustain and grow the business. When there is a lack of cash coming in, it’s hard for businesses to keep up with a variety of expenses such as payroll, marketing, logistics, and inventory.

Beyond that, the cash flow knowledge is crucial for lease businesses as it showcases to borrowers that the tools and equipment they plan to get will allow them to grow their customer base. When there is a lack of it, businesses are more at risk of closing their doors for good rather than growing the business.

Most Importantly Positive Cash Flow Is Needed

Every business owner knows that they need to make money, but something that might be overlooked is the business should have a positive cash flow. To create that, it’s key to have revenue and remaining cash exceed the expenses and costs that the business pays from month-to-month.

Think of positive cash flow as a cushion. It’s important for businesses to grow it so they can make bigger purchases and investments into the business further down the road. Things like leasing equipment to perform jobs faster and more efficiently — which can result in getting more customers.

Beyond that, that financial cushion can help in other ways such as it guarantees stability during slower months.

Why It Matters For Equipment Leasing

Beyond leasing companies seeing positive cash flow as a good sign of a reliable business, it goes well with equipment overall. Equipment can be demanding in terms of costs. When purchasing equipment, it can be a massive investment and typical equipment costs can also demand several months of net profits in one go at times.

Combine this with businesses expanding and balancing costs at the same time, equipment leasing can be a great benefit to companies in that situation. After all, leasing costs can be reasonable and not make as big of an impact to cash flow compared to purchasing equipment. Furthermore, positive cash flows assure reliability in businesses making payments on equipment and putting the rest into other growth efforts or covering other expenses.

Cash Flow Matters

Positive cash flows fuel companies in a variety of ways and being able to maintain a good cash flow means being able to meet unexpected expenses and grow the business in many ways. When it comes to leasing equipment, positive cash flows can reduce the financial burden when purchasing and smooth out the expense over a long period of time, giving businesses several months to gain stability and growth.

Get started leasing or financing the equipment you need. Contact Yellowhead Equipment Finance today to get started. We’ll help you identify your eligibility, work with you to understand your options, and work with appropriate lenders to get the best solutions for your financing needs.