Having equipment that lets you remain competitive is just as important to manufacturers as being innovative with your products.
Having reliable coding and labelling equipment that doesn’t cause downtime (read “losing profits”) is a vital contributor to smooth operations.
But what if your technology needs replacing, and you don’t have the capital funds to do it Basically, you have four options. Here’s how to pick the right one.
Leasing reduces the cap-ex on equipment and gives you all the benefits of up-to-date technology: greater automation, good integrateability, greater efficiency, increased productivity, no shortage of spare parts and consumables, more compact units, increased ease of use … and so on.
If you don’t have the funds to purchase capital equipment outright, you’re far from alone. So which of these four options do you pick
Buy something cheaper (that may not suit your purposes) Pay for it via a director’s loan (not always practical or doable) Limp along (not a very long term-solution) Lease it (bingo — read on to do it the right way)
Leasing not only reduces the cap-ex on equipment, it gives you up-to-date technology — with all the benefits that brings: greater automation, good integrateability, greater efficiency, increased productivity, no shortage of spare parts and consumables, more compact units, increased ease of use … and so on. And gives the option to upgrade to the latest and greatest at the end of the lease term.
It also means you can take advantage of evolution in process automation or coding and labelling equipment that links in to other business areas or other equipment —such as vision or weighing technology — thusincreasing your overall “business intelligence”. And with small businesses increasingly looking at exporting to Asia — particularly China and India — they need to gear up to export and not just with coding and labelling equipment).
Leasing is particularly useful to small business (and larger ones) if you need to update several pieces of product ID equipment at once.
Improving cash flow
While some business owners have a preference to buy, leasing gives added options to those with restricted cash flow to put into buying the right assets for their business. In a highly competitive market it’s important to keep costs low, but it’s also important to know which ones to prune. Updating office artwork is nice, but not necessary, but cutting back spending on capital equipment that contributes to product output, or improves your operational efficiency, is not the way to stay competitive.
An added bonus is that leasing is a fixed cost, with a known outcome.
Matthews partners with Macquarie for leasing (because of its solid reputation), and in some cases we can bundle integration software in with product ID equipment. There are two ways to lease:
operating lease (can also be known as rental): whereby at the end of the lease term, you can continue leasing casually, set another fixed term, have the option to buy the equipment at fair market value or return the equipment. finance lease: at the end of the lease term, you can the continue leasing casually, or buy the equipment for a small residual value.
Each has different tax and finance implications, so choose the option that best fits your business’s needs (after you talk with your accountant).
To talk through leasing options, contact us today.
If your current equipment is struggling to meet the demands of this evolving industry, this whitepaper may help. You may also find this whitepaper on choosing cost-effective coding, labelling and inspection systems useful too.
Matthews has an entire library of whitepapers and case studies, which are all free to download.
* Mark Dingley is General Manager of Matthews Australasia. With 20+ years of experience in the product identification industry and the wealth of knowledge gained from working closely with manufacturers and industry associations, Mark actively contributes to industry forums, magazines and the Matthews blog. An avid soccer fan, he also gets out on the field every Saturday, in between the “sports taxi run” for his family.
