Issue link: https://iconnect007.uberflip.com/i/1512467
28 SMT007 MAGAZINE I DECEMBER 2023 industry, if you're not going forward, you're going backward. ere is no standing still. I am confident but also a little cautious going into next year. Pine: We're still seeing a high level of quot- ing activity. Customers are looking at equip- ment and getting proposals. It's been a very active year. Not quite as much funding as in 2022, but close. I'm not sure I have a specific outlook for 2024, but I see com- panies still looking to invest, with customers telling me they plan Q1 purchases. Tier 4 compa- nies comprise the bulk of our business, and we see them adding complete lines, and replacing and upgrading equipment. Johnson: Do you see themes in what your clients want to add? Is it more capability, capacity, or moving toward Factory 4.0 interoperability? Pine: It has been across the board this year. A few years ago, I saw more test and inspection when their customers were making it a condi- tion in the contract. Now, purchases seem to be about upgrading technology or increasing capacity. Matties: What should someone be planning for when they're looking at their finances? Pine: Since we're working with Tier 4 com- panies, likely it's because they see additional business opportunity out there. We always talk about diversifying funding sources. You may have a bank that will help with your accounts receivable and inventory line that you rely on to help grow your business. We step in by help- ing with term debt. ere are some benefits to separating financ- ing relationships. Businesses can grow credit history with multiple funding sources, and don't overload their bank. If you're asking for a million-dollar term loan to buy an SMT line, but also asking them to increase receivable and inventory lines, you can get to a threshold where your bank becomes uncomfortable. You don't want to do that when you're trying to grow your business. We also educate our customers on the impor- tance of having a borrow- ing history. You might have $250,000 set aside for equipment purchase, but if you're always pay- ing cash, you're not building a credit history. When you don't have any credit history it's hard to provide the lender with a level of comfort that you can pay debt back in a timely manner. Carey: Established credit history also makes the EMS company more attractive if they are looking to sell, particularly to venture capital companies. It's always a good idea to stay liquid. Paying cash for equipment and then deciding to refi- nance creates problems. It brings up red flags in the credit process. In some cases, it could cre- ate another taxable event. It probably makes sense to pay cash for small ticket items. On larger ticket purchases, paying cash could be disastrous if the economy immediately tanks. Is paying cash worth the risk? Matties: Thank you both for taking the time to talk with us. Pine: ank you. SMT007 Customers are looking at equipment and getting proposals. It's been a very active year.