Are Equipment Soft Costs Slowing Your Growth?

Do you know what the real cost is for getting your equipment ready to work? When calculating expenses, it’s easy to focus on just the equipment, but what about all the other, non-equipment things you need to actually get any work done with that equipment? 

Think about it. Not sure what I mean? Here’s an example: The purchase price of your new machine doesn’t include taxes — an additional cost you have to pay. Another example: Before you can do anything with your equipment, it’s got to be delivered. That’s a cost. One more example: Does your application require specific attachments? Those will need to be purchased and installed. Another cost.

These “soft” costs can be hard on your cash flow, especially when you need the cash to keep growing your business. Not to mention, many of these costs occur before you even get a chance to put your equipment to use (i.e. make money with it). And, they can add up quickly!

The Stealth Impact of Soft Costs
Soft costs typically refer to intangible items like delivery, installation, taxes, service agreements, insurance and so on. Taken together, soft costs can easily add 20 percent or more to your equipment cost. But despite substantial budget impact, they can slide under the radar to stealthily increase your total cost of ownership. These costs are impactful regardless of the size of your company or your equipment fleet, whether telehandlers, scissor lifts, booms, low-level access units or any other type of construction equipment.

But, here’s the bigger picture: Soft costs can create immediate and longer-term cash flow issues that in turn affect your ability to go after growth opportunities. Which then affects your cash flow. Which affects your growth. And, so on.

 
How to Lessen Soft Cost Impact on Cash Flow
How can you escape the cash flow spiral that soft costs can contribute to? One of the best ways to do that is with the help of a finance provider who can bundle your soft costs along with your equipment*. This will give you one predictable, affordable payment each month, instead of a big upfront blow to cash flow that can reverberate for months and even years to come.

Another key advantage of financing your equipment is that some providers can customize your terms to help you further control cash flow with reduced payments during the ramp up/training phase required by some equipment. You can also request a seasonally adjusted payment plan to help with routine business fluctuations or seasonal downtown. Other alternatives to consider include: Upfront payment deferrals or lease terms that match the term of the project to the length of financing, giving you the opportunity to return the asset once the job is complete.  

Once your equipment is working at full capacity to generate revenue, you can begin paying the regular monthly amount using cash flow generated by the equipment, not cash reserves. This way, you and your finance partner can give your equipment time to start or resume earning its keep — and then some — while preserving the cash flow that’s so essential for business growth.

Pick a Financing Partner You Trust
Many OEMs (original equipment manufacturers), including JLG, provide financing assistance for customers during the purchase process. 

JLG Financial™, for instance, has developed financing programs specifically designed to meet the needs of the access industry. How? By offering flexibility with convenience, as opposed to other lenders that flash low rates but have rigid terms and require a lot of paperwork to get approved.  

For example, JLG Financial can finance your entire fleet, all equipment makes and models, new or used, on JLG machines, as well as non-JLG machines. And with JLG Financial, you can finance 100 percent of equipment purchases, as well as up to 20 percent of equipment soft costs. JLG Financial also offers you have access to reputable funding partnerships, subsidized retail programs, customized plans, competitive interest rates and tailored payment plans that are proven to drive more profit, manage fleet inventory efficiently and to provide flexibility for growing and changing business needs. 

*JLG Financial offers flexible financing options that gives you the ability to finance up to 20 percent of your equipment soft costs.

To learn more about financing with JLG Financial, click here. 

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