Heavy construction equipments require major investment. Therefore heavy equipment leasing might be the answer.
If you are not sure about the expected expenditure you should get the equipments on lease rather than buying them outright.
Heavy Equipments are best Leased.
When you are in construction business, there are many intangibles that crop up when you are worming on project. These intangibles do not allow you to have time for scurrying to banks for loan, as the work involved becomes urgent and “to be completed yesterday” type.
In such cases if your capital is locked up in heavy equipments, the balance sheet will show lot of loans and further loans will not be forthcoming from banks. Therefore heavy equipments are best leased by the construction industry.
Types of Heavy Equipments
The heavy equipment required by the construction industry may be classified as
- Bucket wheel excavators
- Concrete mixers
- Dumper trucks
- Road paving machines
- Smooth roller
- Vibrating Rollers
- Wheel loaders
These equipments represent a sizeable investment and purchasing these will break the accountant and the financers back. On top of this if there is unplanned expenditure, then it will be proverbial straw on the camel’s back and the structure will be on the verge of collapsing.
To avoid this financial planning is necessary. A major part of financial planning starts on leasing of equipments. The leasing of equipment has synergistic repercussions throughout the organization and everyone will be looking towards saving or reduction of capital expenses that do not yield immediate benefits
The benefits of leasing are
1. The balance sheet improves and the company financial health indicator ratios look good and in case of emergency, the bank will be eager to give you loans.
2. Higher working capital will be available to you without the attendant compromise with the availability of capital equipment.
3. The banks will be after you instead of being the other way round. This means that as soon as you approach the banks you get the loan.
4. The additions to the machinery can be done quickly as required and this gives speed to the entire organization. The company becomes more responsive when the employees know that any machinery can be made available when required and that too without any time lag. This makes the employees who are time wasters, scurry for cover when confronted with “results or quit” ultimatum. This makes for a supple and responsive organization.
5. The organization also becomes flexible as a result of having the backing of equipments. Employees will be ready to work with you as long as they have the equipment leased or bought out.
However when you have the leased equipments at your command the “Bean Counters” do not have an upper hand and the commands goes to the person in the field rather than the many of whom lean on the bean counters
6. The obsolescence of equipment is avoided as new equipments can be made available at fraction of new equipment.
So you can see that the decision in one of the areas of the company has very good synergistic repercussions and reverberations through out the organization. And since this is good for the company, the idea of leasing the heavy and costly equipments rather than buying them works for the god of company