Heavy Plant Equipment Inventory

In stretching times not all businesses will be willing to invest in new inventory. Decision making will be affected by the underlying economic certainty  or  uncertainty based on past, present and predicted future performance. None of this is made any easier by the range of economic commentaries or the "unknowns" which can lurk on the horizon in the form of shocks to "chip" supply chains and inflationary pressures as a result of pent up demand.

So how can you create a better environment to induce investment in new inventory?

One way is to work with your Client and or Leasing Company (it could be a Dealer) and enable them to offer their Customers a Buyback Guarantee. When selecting a loan the size of the Customer's regular monthly repayments can be effected by the size of the balloon selected, which is the amount owing at the end of the loan.

The balloon payment is the lump sum owed to the lender at the end of a loan term after all regular monthly repayments have been made. Splitting the loan up this way allows the customer to repay only part of the principal of their loan over the term and reducing their monthly repayment in exchange for owing the lender a lump sum at the end of the loan term.

This approach increases affordability and maximum loan size and so assisting with cash flow management particularly when it may be most needed.

To further enhance the buying experience it can be possible to provide the customer with the option to either pay the balloon outright and take outright ownership of their equipment purchase or return their equipment.

Such programs need to be carefully drafted and clear appraisal of the historical residuals relating to the covered equipment to extrapolate future risk together with client appetite to share in risk.

Favorable accounting treatment depending on the region or territory can also make the program appealing.

For further information or an informal discussion please contact Mark Standen, Mocden Insurance Services mstanden@mocden.co.uk