The commercial truck industry is requiring all businesses to upgrade to more emissions friendly engines. Many industries are also adding GPS-asset-tracking technologies. IT equipment needs to be upgraded in most industries on a frequent basis.

Whether part of a regulatory move, efficiency gains or the requirement to keep up with the competition, the word “upgrade” has a big impact on the lives of financial decision makers. And a bigger impact on their cash position.

A Little Planning Helps

Most of the time, businesses understand the never-ending need to reinvest in their commercial equipment. They just don’t plan for it.

Many stakeholders only think about an upgrade or replacement in a break/fix emergency. No wonder equipment replacement and capital expenditure budgeting can be thought of as painful. Waiting until these big events to evaluate an upgrade or replacement can be a very costly endeavor.

Planning for capital equipment acquisitions based on your equipment life cycle and usage needs can lead to lower equipment acquisition costs and simpler operations.

Sinking Cash into Equipment Doesn’t Give You That Sinking Feeling

Another reason businesses feel the pain of upgrade is the cash drain. Big hits in cash flows for unplanned equipment needs hurt. So why wait for an emergency?

Virtually all classes of commercial equipment lose value over time. You wouldn’t knowingly invest $50,000 in a stock you know is going to be worth $25,000 in five years. But time after time businesses make large down payments or pay cash outright for their commercial equipment—putting ROI into real question-- especially in the early months or years of usage. One could easily question the merit of paying cash for 100% of an asset that is going to be valued at half of what you paid for it in the near future.

A Simple Solution

What would happen if you just paid for what you use via a simple monthly payment in your budget for the use of business-critical equipment?

When the equipment is ready for replacement or upgrade, you just get the new model and keep the monthly payment stream going.

Even mobile phone companies have caught on to this concept by introducing no down payment monthly financing of your phone, which has created terrific growth.

Rather than a $200-$700 hit to personal cash flow every few years or when your phone goes swimming, you just pay a modest amount per month. And then every few years, you pick up the new model without a ripple in your cash flow.

Taking this approach to commercial equipment offers more predictable cash flows and can enable greater ROI.

Can You Afford Equipment Upgrades?

Learn how you can better manage your cash flow to afford equipment upgrades by connecting with a PNC Equipment Finance representative.