The CASH Dilemma

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Issue #12253 - August 2020 | Page #71
By Ray Fedorko

One of the most frequent responses we hear from prospects when asked how they hope to pay for their equipment is simply: I’m going to pay cash.

It’s a nice feeling to pay cash. Done and paid for. No payment schedule or finance charges. And surely, if interest payments hover in the 18% range and higher, paying with cash is the best option. But, interest rates are at record lows. And with the economy in a slowdown due to the coronavirus pandemic, the current low-rate environment will remain so for the foreseeable future.

Once cash is used to pay for anything, it is gone. Sometimes forever. So in a time of uncertainty, when a business might urgently need cash for a real emergency, or sudden liquidity needs, it simply won’t be there.

Will a business be able to count on their usual funding source then? We’ve seen in the past few months how funders have cut off certain industries, raised requirements, and limited exposure to companies. At any point in time, they can (and have!) suspended funding.

And then there is the return on investment (ROI) issue. If a business has laid out a large amount of cash for equipment, the profit that the equipment generates in the first, second, or third month is not going to cover the cost of the equipment. But the profit generated should be enough to cover the monthly payment of the financed equipment. Again, the ROI will be enhanced by the fact that only a monthly payment needs to be made.

Our point: As long as you can generate additional income from the equipment above and beyond the cost of financing it or lower production cost in some way, financing is a solid and viable option.

Preserve your cash. Allow your additional cash flow to cover the monthly payment. The only collateral you will need is the equipment you are financing. You’ll have no financial reporting or renewals to deal with either. And if you are in a seasonal business, you can make minimal payments during your slow season.

To learn more, or explore the various funding programs available, call us at 412/262-3225 to see how we can help.


Acceptance Leasing and Financing Service, Inc. was established in 1992 by Carl Villella, CLFP, and is located in Moon Township, PA, near Pittsburgh.

Ray Fedorko

Author: Ray Fedorko

VP Marketing, Acceptance Leasing and Financing Service, Inc.

You're reading an article from the August 2020 issue.

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