Preserving Cash Flows
While you might jump to conclusions about the reasons businesses look for alternative sources of equipment financing, you might be missing the point—preserving working capital relationships.
Banks are getting pretty beat up these days. And while there have been a few bad actors, the overwhelming majority of bankers are still there standing firm for their clients. Sure, relationships are more complicated, but the average bank has had to increase its legal and compliance staff by more than 200% in the last ten years to keep up with the new “strength” requirements of our government. For many businesses, it’s not that banks can’t help with equipment needs, it’s that adding additional debt might limit or strain the bank’s view of your lines of credit.
Your working capital line of credit is more than a lifeline. It’s your lifeblood at times. Peaks and valleys in operating cash flows can be challenging. Whether ramping up to meet a new customer’s requirements before the revenues come in, seasonality, or long receivables cycles—your working capital line of credit allows you to access the funds needed to normalize your cash flows when things are anything but normal. But adding equipment or “term debt” to your relationships can give bankers pause about the overall relationship.
There is only so much debt a single lender can invest in your company. Even if you make all your payments, there is a magic “exposure” limit of risk lenders can’t cross. It puts them out of compliance with regulations in an encyclopedia-like list of regulations. So, if working capital is so important to the cash flow balance of your business, why would you take a chance on disturbing that delicate lending relationship if there are more and potentially better options for equipment finance?
The key advantages of an equipment financing provider are:
- Deep knowledge of commercial equipment
- Finance alternatives that lead to lower payments and improved cash flows
- Less money required upfront so you can preserve your cash for higher returning investments than depreciating equipment
- Speed. Often these providers can fund your equipment need with more flexibility, faster than the bank can get the opportunity to their credit committee
- You can preserve your delicate working capital relationship while having access to the financing needed to affordably out revenue-producing equipment to work
For more than 30 years, TimePayment Corp. has offered flexible monthly payment options for equipment needs starting at $500 and reaching to $500,000 and beyond. From startups to growing national brands and local dealers to major equipment manufacturers, over 1 million companies have trusted TimePayment’s innovative technology tools and creative capital to address equipment needs.
