Capex Budgets Shrink but Equipment Still in Demand

Capex Budgets Diminishing

Capital expenditure budgets (capex) have seen better days, according to data released by the Australian Bureau of Statistics (ABS). Businesses looking to buy or sell equipment to SMEs should consider finance as a solution to diminishing capex budgets.

Regardless of whether a business has a burly capex budget or not, the need to remain up to date with equipment is of the utmost importance. Businesses without the most effective machinery risk losing out to competitors that have better equipment at their disposal.

With the latest Federal budget announcements expanding the accelerated depreciation measures to small businesses turning over up to $10,000,000, we’re finding that many businesses are looking to finance options to obtain the equipment they need now and take advantage of the measures.

 

On a secured loan agreement for example, the customer owns the equipment from the outset, potentially allowing them to depreciate the asset instantly. Whilst the repayments still come out of the Capex budget, the total cost of the equipment can be spread across a term of up to 5 years. Alternatively, a large portion of our clients opt for a Rental Agreement or Operating Lease, so that the repayments come out of their operating budgets rather than their capex. This means that they cannot depreciate the asset, but the repayments are typically 100% tax deductible.

Businesses requiring new (or used) equipment shouldn’t postpone acquiring this equipment without first speaking with their accountant or financial advisor, and exploring the many finance options available to them.

Likewise, businesses selling equipment that are finding that their customer are postponing purchasing big ticket items or perhaps are settling for lower spec machines, may benefit from offering these clients a payment plan. We partner with equipment vendors to give them another tool to make their sales process faster and easier. One of our vendor partners was recently elated when their customer, only days after financing equipment, returned to add more equipment to their rental agreement.

Businesses looking to buy or sell machinery and equipment to SMEs should not be disheartened by the difficult Capex budget trends, but rather should get in touch with our team to discuss options to make equipment easier to acquire on payment plans! 

 

David Wright

Asset Finance – Senior Relationship Manager

david.wright@classicfg.com.au 

1300 780 895

Enquire About Equipment Finance 

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* We do not provide financial advice.  You should obtain your own financial advice on the tax and accounting treatment of any finance solution you choose.