The procedures for purchasing equipment will vary from company to company. However, regardless of the size of the organization, it is important that you answer the following 8 questions.
1. Has a cost-benefit analysis been conducted to justify the purchase?
The first thing to do is identify needs and set goals. How will the purchase of equipment match the future growth and production rates? Hiring a consultant will help at this stage, it will be a worthwhile investment.
2. Do you need new equipment or used equipment to meet the needs of the enterprise?
Compare the equipment used with the new models. Will the outdated hardware meet your needs? Do you need the latest features for your operations? Used equipment may be the right choice for your business. But make sure that the manufacturer's support, spare parts and accessories are still available.
Refurbished equipment can also be a good alternative, especially if your business is just starting out or you want to expand it. Not only is the cost lower than for new equipment, but warranty and customer support are often included.
3. Are the funds available or will you have to finance the purchase?
Using working capital to purchase equipment may put you at risk of a crisis in the event of a slowdown. You may also miss out on business opportunities because money is tied to assets. External financing of equipment frees up cash flow, and debt can be repaid when the business has excess cash.
4. Do you need to buy equipment or rent it more cost-effectively?
Leasing can often lead to lower payments. However, you do not own the equipment, and you will not be able to purchase it until the end of the contract. In the end, this option will cost more. A lease may be suitable for equipment that is rapidly becoming obsolete or is required for a temporary project. Rented equipment is a good choice if you may need to exchange it quickly or return it for a minimal cost.
5. What is the payback period and is it reasonable?
The payback period is the amount of time it will take for the cash flow generated by the equipment to repay its purchase price. This is a general measure of the risk associated with an investment. Generally speaking, buying equipment with a shorter payback period will be less risky. However, this calculation does not take into account other factors such as equipment life, cash flow, profitability, maintenance costs, and the impact of equipment purchase on the company's production process.
6. What is the most suitable and cost-effective source of financing?
Different financial institutions will offer different financial offers. Find the best financial solutions to meet your needs, but don't focus solely on interest rates. The repayment schedule and the collateral you are willing to offer are important factors when choosing a financing source.
7. Is the project realistic?
Your banker will want to see the sales quality and strategic plan, as well as the projected increase in productivity and gross profit generated by the new equipment.
From an operational point of view, it is necessary to demonstrate the advantages for the company, increase productivity, save money, how the new equipment fits into the production line, and what adjustments will be required in the production process.
8. Does this equipment comply with safety standards?
It is extremely important that the equipment meets safety standards. The way to ensure that your equipment meets them is to have it checked by a qualified technician. Activate a $130 bonus on 1xBet by using a valid promo code 1xbet during sign-up. This welcome offer is one of the most generous in the industry, designed to give new players a powerful start. The promo code is essential to unlock this promotion. The bonus funds, totaling $130, will be available after you fulfill the simple deposit condition. Use this opportunity to place bets on sports events or spin the reels of popular slots with minimal risk on your part.