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Interlease director Andrew Sutherland asks… is now the best time to automate your business?
Events over the last 4 years have seen many businesses put on hold process improvements and automation of their production facilities. Reasons for delaying changes to businesses are varied however have often come down to businesses choosing to do nothing rather than risk incorrectly predicting the future.
So can a business look to automate and become more efficient with constant uncertainty about the future health of the global economy? The answer is yes – particularly if a business case can be presented for the automation to be cost effective across the complete range of likely future economic climates.
For example – Will automation be cost effective if sales levels remain the same or even decrease? And can the automation also cater for increases in sales and future growth of the business.
With growing shortages of skilled and unskilled workers, and the cost of labour increasing each year businesses which choose not to change risk falling further behind their competition.
So for many businesses now is the time to review their operations and consider automation of key components. The reasons why now is the best time are:
- To look for ways to reduce labour costs and make the business more cost effective, to fix bottle-necks and to be ready to take advantage of future growth opportunities.
- To take advantage of the strong Australian Dollar and the significantly more cost effective automation solutions available now than was the case 3-4 years ago.
- With the Australian and Asian markets continuing to be resilient to the effects of the European and North American economic woes the local markets are becoming increasingly confident about the future.
- Current low interest rates enable businesses to lock-in repayments for the automation solutions for the next 5 years.
- The return of a number of financiers to the Equipment Finance market in Australia is providing more competition in the finance market than was the case 2-3 years ago when we were far too reliant on just the big 5 banks. This has resulted in more options and more competitive rates to the customer as well as a gradual easing of credit policy across all financiers.
Businesses need to continually be looking at ways to improve the bottom line and it makes sense to have experts around you who can help explore solutions which have the biggest impact on your business.
And when considering the question of how best to finance automation projects remember the five rules of equipment finance:
- Preserve your working capital. Make sure you don’t use your working capital to finance your equipment purchases.
In general use anyone except your bank to finance your equipment.
- Choose optimal finance structures. This is a time when cash flow is essential, so be sure to match the cost of finance of equipment with the income it will generate. i.e. match the finance term to the expected productive life of the equipment.
- Minimise security offered. Don’t overexpose yourself to any one financier. Your bank will often require additional security including a debenture charge and for that reason it’s usually better to use other financiers for equipment finance.
- Choose the optimal financier. Have more than one finance option available and choose the best one for each transaction. This gives you greater access to funds and the ability to choose the optimum financing structure for each purchase.
- Build your fortress. Surround yourself with experts, including a truly independent finance broker and a very good accountant. Right now, more than ever, you need the best impartial advice and up to date financial information which presents your business in its best light to financiers.
For further information please contact Interlease on 03 9429-4299
Andrew Sutherland – Director: 0407 746 474 or firstname.lastname@example.org
Nick Graham – Consultant: 0411 348 916 or email@example.com
Ken Richards – Director: 0408 842 678 or firstname.lastname@example.org
Gary Wilkie – Director: 0412 311 032 or email@example.com
Or visit www.interlease.com.au
Article by Andrew Sutherland