SMT007 Magazine

SMT007-Oct2021

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OCTOBER 2021 I SMT007 MAGAZINE 55 When it is time to purchase new equip- m e n t , c o m p a n i e s may decide to finance t h e i r u p g r a d e . B y choosing financing, you can achieve a bet- ter equipment line- up without egregious spending , break ing up payments over a span of time. Financing your Equipment Upgrade Owning an SMT line could be easier than you think; by taking advantage of lower financ- ing rates that are currently available, you could save big over an 18-, 48-, or 60-month leasing period. Depending on the company you go with, there may be special deals available (such as 0% APR for the first year), so it is always good to ask. ere may also be a minimum pur- chase requirement (such as a $50,000 expendi- ture or more) and first and last payments will likely be required up front. Make sure to inves- tigate the details and ask questions throughout the process to ensure you understand the re- quirements and to ensure you get the best deal possible. Bonus Tip: If you have working equipment in-house, keep what you have, fixing and up- grading it along the way. It is more profitable to have it out on the floor than collecting dust. It is good to have slower machines running in the background, and then have newer, high-speed equipment in the forefront. Also, if customers and visitors come to see your manufacturing set-up, there will be a larger range and bulk of equipment for them to view. Tax Advantages of Upgrading Equipment During your company's profitable years, pur- chasing new equipment and investing in exist- ing equipment can open you up to tax advan- tages. You can retain cash and save on taxes by writing off equipment purchases through Sec- tion 179. Since Section 179 was updated in 2018 to allow for a 100% first-year deduction, even a single invoice of a machine purchase or lease during this tax year can lead to a full write-off for your company. Taking advantage of this op- portunity can help reduce your overall capital expenditure and make your next equipment upgrade an even more profitable investment. Moving Forward: Equipment as Investment Overall, deciding to bring production in- house or deciding to upgrade your existing equipment are both examples of capital expen- diture done well. is short-term expense is a long-term investment in your company's fu- ture. Like any effective capital expenditure, it will ensure that spending a little now will re- sult in saving a lot later. If you are looking to get started with your own production—or have noticed that an equipment upgrade may be in order—don't wait. Shortages worldwide are making lead times longer, so it is best to en- sure you have what you need when you need it by ordering early. Current lead times for new equipment are 16 weeks or longer on average. As a final point, repair the machines you own and invest along the way, purchasing before the upgrade you need becomes critical. SMT007 Emmalee Gagnon writes about SMT-related topics and customer stories for Manncorp. To read past columns or contact Gagnon, click here. Figure 3.

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