When financing your equipment, it’s important to consider a specialised repayment structure that is reflective of your company’s situation. Your cash flow has a major impact on how you repay financed equipment, which is why it’s essential that you choose a repayment scheme that is well-suited to meet the needs of your business
We’ve listed a few repayment structures that can be used when financing equipment for your business to help you determine which is better suited depending on your company’s specific cash flow needs.
Receive GST back after the fourth month
Receiving GST back after a shorter period allows for clients to start generating income from the asset prior to making the lump sum repayment.
Three months of $0 repayments to start
This gives clients the ability to organise their repayments and cash flow before starting to pay the loan back. Repayments are for 60 months, and in this instance, repayments are then dispersed over the remaining 57 months after the three repayment free months.
This system of repayment can work well for clients such as farmers and shop owners, who may have a random or irregular cash flow to their business. Clients are able to adjust the repayment schemes to better reflect their peaks and their quiet times at any point in the financial year.
This scheme involves reducing the monthly repayments that the client is required to give back as the months go on. At the beginning of the contract, a larger amount is refinanced, while the later monthly repayments will be gradually lowered before being completely paid out.
Lump sum payments
If there is an influx of income due at some stage in the future, clients are able to build this into the repayment schedule. This will then reduce the other repayments and allow clients to use windfall effectively.
Sometimes where a deposit is required, financing has been negotiated for 10% upfront and another 10% after the third month. This means the client does have to put some skin on the line from the get-go, but it also means they have an opportunity to generate cash flow before the additional lump sum.
If you wish to find out more about repayment structures that will better suit your cash flow, speak to the experts at Atlas Equipment Finance. We are happy to provide guidance to our clients about financing options that better suit their personal needs and requests.