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Frequently Asked Questions
Structuring Asset Acquisitions to Meet Your Individual Business Needs
Q. I'm considering buying some new equipment, what should I consider?
A. Besides balancing the cash flow considerations with the need for new equipment, you should also consider the following questions:
- Will the equipment allow the company to remain competitive and expand into new markets?
- Will the equipment increase the efficiency and productivity of the work force?
- What resources are available to aid in asset decisions?
- What is the outlook for technological advances in the industry?
- What are the acceptable financing alternatives available?
Q. I'm always trying to keep my company competitive. What should I consider when buying equipment?
A. Competitiveness is more than simply being able to deliver a comparable product at a reasonable price. In today's business environment, a company must not only be able to compete in price, but also in timeliness and quality. If current equipment is incapable of producing a product that adheres to the technical standards or restraints a customer has demanded, the company will be unable to compete. In determining needs, careful consideration should be given not only to immediate needs but also to future growth and expansion.
Q. Should consider my company's productivity when buying new equipment?
A. In initiating the analysis of the proposed acquisition, the work force's productivity, job performance and ability in meeting demands should be carefully considered. If the acquisition of new or updated assets will allow current workers to meet increased demand, an acquisition may present a better financial alternative than employee additions or the payment of overtime required to complete deadlines with existing equipment.
Q. I've made the decision to buy equipment, what should I consider in how to purchase it?
A. Once the decision has been made to acquire property or equipment, the next issue is determining how to finance the acquisition. The options available for financing new assets are seemingly endless. From cash, long-term debts, mortgages, and short-term lines of credit, to lease purchase agreements and straight leases, the alternatives are at times confusing. Key factors to consider in accessing financing needs include the type of asset, long-term business needs, and the company's overall financial situation.
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