Disadvantages of Purchasing Industrial Equipment

Supplying your business with all the necessary equipment can be pricey. It can cause companies to have the age-old debate of whether to rent or buy. There are benefits to buying assets. However, you should know the disadvantages of purchasing industrial equipment.
Upfront Costs
Buying equipment means you must foot the bill immediately, putting a severe dent in your short-term cash flow. There are ways to fund your purchase, such as getting loans, but the initial down payment and later payments may be demanding.
Additionally, prices vary from business to business, with smaller firms being more concerned with getting a fair deal. Lastly, it may be challenging to accommodate the cost with your other business operations. This can put you behind if something else goes wrong with another machine.
Antiquated Equipment
Odds are, you have a piece of equipment in your home that no longer has a purpose and has become obsolete. The same can happen in an industrial context. For example, you don’t want to get something like an orbital welding machine that becomes outdated with a fixed budget. Instead, you should rent the orbital welding machine.
Technology changes daily, making it a gamble anytime you intend to buy anything. Therefore, if you don’t want to be in a committed relationship with machinery, it might be advantageous to rent something until you feel comfortable enough to do so.
Maintenance Costs
One of the best things about renting a car or real estate property is that fixing things doesn’t come out of your pocket. If your HVAC system conks out, you can call your landlord. They’ll be responsible for the repair, allowing you some financial flexibility. You can’t say the same for industrial equipment.
You’re responsible for fixing your equipment, which may teeter your balance sheet in the wrong direction. Regularly scheduled maintenance checks prevent costly mishaps and give you a general idea of any expensive repairs that may be on the horizon. You can then plan accordingly.
Lack of Tax Break
When renting equipment, you’ll end up getting a tax break. However, when you purchase equipment, that tax break doesn’t exist. Thus, if you want to deduct the cost of your machinery at the end of the year, you’ll have to rent.
Depreciation
Like any asset, industrial equipment depreciates over time, making you spend more money than what it’s worth over time. It stings when you owe twice as much as what the item is worth. So it might be worthwhile to rent equipment instead. Being able to back away from a depreciating asset is advantageous in many situations.
If you and your business can afford it, owning something tangible is nice. However, these disadvantages of purchasing industrial equipment might deter you from taking the plunge.