Nobody Likes Paying Interest

We know that completely; nobody likes paying interest, neither can we. It’s a psychological hot button for almost any business person when financing equipment or acquiring working capital. They feel it’s like money disposed of into thin air… or possibly it? Interest is the cost when using another woman’s money to invest in something. So why not pay cash and eliminate interest? When business folks point out that to me I respond with, “if you’ve unlimited cash or if you might have enough resources that paying cash won’t jeopardize your organization cash flow then go right ahead”. I never debate that point since it is an emotional one. But the warning must be clear; paying cash for an issue that cripples you skill to have capital for emergencies, market changes, market opportunities or expansion isn’t wise. If your market changes and purchasers slowdown, going in your bank and borrowing capital may prove difficult; it does not be easy because traditional lenders usually are not risk takers and lending to some downward trending customers are “risky”.

Financing assets in conjunction with paying interest lets you preserve your capital and also the longevity of your company. Of course the finance payment has got to make sense; it needs to fit as part of your monthly budget along with the asset should contribute in a way or some other to your bottom profit line. It should make you profit or help you save money. The third contribution is harder to measure which is often image and goodwill; if you are a custom interior kitchen retailer then choosing a modern showroom to your clients to visit your products is usually invaluable and provide you a high value for your dollar but again what a little harder to set an exact number on. In any case, the finance investment still needs to be manageable in your budget.

Though nobody likes paying interest, it needs to be viewed as simply part of one’s return-on-investment calculation to ensure you are making the most effective use of the new equipment addition. How to get the minimum rate? Maintain your personal FICO up to possible and acquire it repaired using a service when you get into trouble, see the D&B business profile make certain it’s accurate, if any tax liens exist then generate a payment plan and still have it documented along with place which shows you’ve taken the proper steps to end them and ultimately have your financial statements prepared with a service, bookkeeper or accountant that may indicate you happen to be organized and manage your company seriously. In the long run if managed properly, the finance appeal to you pay will in reality pay you back.

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