Every business within the dimension of manufacturing industry requires machinery of the excellent caliber to deliver the best products or services in the market. Hence, purchasing a machine is one of the biggest decisions for every business irrespective of its size or the revenue collected every year and this is one of those decisions which cannot be taken lightly without proper planning. There are several factors you need to consider before purchasing a new machine or equipment; from purchase cost to the output that the machine will produce to the machining efficiency, everything needs to be analyzed thoroughly before you decide to buy machinery. Thus, to make the process really easy for you, here are some points that you need to consider before buying a new machine.
There are few large businesses in the country who deals with large amounts of liquid cash flow and they can afford to buy a machine or equipment if required instantly. They mainly choose to buy for having the complete ownership of the piece of equipment and to use it as long as they want without any constraint. But for most of the business rather the small and medium-sized businesses do not have access to that much amount of liquidity and thus buying a machine is not an option. Even if they have cash in their hands but making an investment of such a large stature on buying a new piece of equipment can have a critical impact on their flow of cash and it can result in a reduction of investment in important fronts of the business thus resulting in the slow business growth.
In the world today, there are several finance options available to small businesses for procuring their required machinery without affecting their business significantly. The most viable options that can be availed are the machinery loan and asset finance which can be availed from a financial institution to buy machinery instead of investing all the cash in their hands in the process of purchasing. The loans allow you to invest the maximum percentage of the available cash in the growth of business.
2. Tax Exemptions
If you buy “plant and machinery” as defined by HMRC then you become eligible for claiming the capital allowances and these allowances cover a multitude of costs related to these items. The capital allowances are generally deducted from the tax that you require to pay and this tax deduction also prevails if you buy machine, vehicle or equipment with the aid of asset finance. The allowances are deducted from the tax payable only once in a fiscal year thus it is very important to calculate the total purchase cost in order to get the maximum exemption from tax. Whether the purchase is done through hire purchase or leasing finance, you will always be able to claim the VAT tax and you will also be able to exempt the taxes by deducting the charge for rent. Therefore, you should always be clear about your cost of purchase and their timing with your financial advisor or accountant.
3. Business Growth and the Machine Usage
Before buying equipment or a machine, you must always analyze its usage and the benefits that you will enjoy from a new machine. Do you have enough work for which the new machine or equipment will be used? Or is there any way through which the work pressure gets so increased in the upcoming days that a new machine will be required? You need to think about these thoroughly if you do not want to be buried under the heap of losses. Though there are several socio-economic factors that can affect your business and work but other than that you must ensure that the purchased machine or equipment is used extensively.
4. Running Cost
The running cost of a machine affects the total cost price significantly throughout its entire lifetime. Hence, before buying equipment you must compare the running cost with the cost of the machinery you already own (if there is any) or with the cost of the same kind of machine in the market. The comparison must be done on the aspects like the increase in output, the cost of fuel and repairing.
Time is one of the biggest factors that you must consider while buying a new machine. How long will you need the certain equipment? Ask yourself the question before buying the pieces of equipment. If you require the machinery for just three to four years and you want to replace them after that period of time then the smartest way you can uptake is to lease the machines. Hire purchase financing helps you to procure the machine instantly once the payment for the machine is made on agreeable terms.
Though there are several financial institutions in the market right now, it is always wise to take the aid from the best to get lower rates and maximum advantages. Intec Capital offers you the best offers on machinery loan and asset finance which are custom designed in a way to meet all your needs. Moreover, your loan will be sanctioned within a short time without having to face any hassle. Thus, get your hands on the required machinery with our aid and ensure more profits from your business.