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The
question you have to ask yourself is "What is the smartest purchase option
for my vending business?" Running a vending
business is hard, but managing your money the right way will only help you
succeed. Use your cash where it will
make you the most money. If your
assets are invested and earning a good return, leave them there until they
are needed. If cash is used in your
day-to-day operations, why tie it up on large equipment purchases? Ninety days "Same as Cash" allows you to
put your purchase on a contract and as long as the balance is paid in full by
the 90th day, you pay no interest.
Credit
card purchases are not always what they seem. A $10,000.00 equipment purchase on a
credit card at 18% APR, when you are making only the minimum 5% payment
(beginning at $500/month), will take you eleven years to pay off! Add a late payment and pack on late fees or
penalties. Also take into account that
credit card rates can change. This
could increase monthly payments and hinder your cash flow even more. Now, finance that same purchase for four
years, on a FIXED rate contract, even at 18%, and the payment is less than
$300/month. Plus, you hold the
opportunity to pay the $10,000.00 in full at the end of 90 days and pay
0%. Which purchase makes more sense
for your vending business?
There
are other advantages to financing as well, the first being tax
advantages. Of course, we suggest you
talk to your tax advisor about how interest can be used as a deduction on
your income tax filings. That's right: you can earn income from your new
purchase and get deductions on your taxes.
Second, you allow yourself the opportunity to build a strong
relationship with a lender that will be there for you when you need them. For example, let's say that the 500
employee factory you have been calling on for the last three years is finally
ready to say "Yes." When that happens,
you want to be in control of the situation and be ready to make your move
without a hitch.
No one
knows your situation better than you.
Take the time to truly evaluate your buying options and make the best
decision for your vending business.
Don't fall into the usual pitfalls of poorly managing your assets and
not understanding the cash flow of your business. Be ready for the unexpected and when it
does happen, have the ability to handle it.
Keep your cash available, leave your credit cards with minimal
balances, and finance your equipment purchases with "Same as Cash" options.
Visit www.financingvending.com, and
take a moment to complete a credit application and see what kind of buying
power you have. The application will
take less than two minutes to fill out.
What do you have to lose besides the next great location?
© Independent Vendors
Association
Second Quarter 2006, IVA
Quarterly Magazine
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