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Financing should not be an afterthought. It can be part of your operating strategy to ensure you have the right equipment when you need it.
By Julie Murphy

The waste industry is capital-intensive, and whether you are purchasing garbage trucks, vacuum trucks, or carts and containers, finding the means to pay for this equipment can be daunting. And when combined with general inflation, ever-evolving technology changes, and wage increases to maintain your workforce, available cash to pay for these needs can be scarce.

So, when it comes to making your equipment purchases, financing can be a great way to ensure that you have the machines and accessories you need to grow your business and remain competitive. Even if you do not currently need to purchase and finance equipment, there are some actions you can take to be better prepared when the time comes to apply for a loan.
This article gives you some ideas and tips on how to prepare to successfully finance your equipment purchases.

Have Your Paperwork Organized
Even if you are not currently looking to finance an equipment purchase, your paperwork should be well-organized, up-to-date, and easily accessible. Most credit approval delays occur because the lender is waiting on paperwork and documentation from the borrower. Having your documents, such as bills of sale, bank statements, tax returns, financial statements, and articles of incorporation in a safe and easily available place will make it easier to provide them to a lender when needed.

Be Open and Honest
The quickest way to derail a financing transaction is to withhold information from your financing partner. Title searches, lien searches, and credit bureau reporting are just some of the ways a lender can discover past challenges such as tax liens, bankruptcies, delinquent payments, and more.However, these types of past issues do not have to ruin your chances of getting approved for a loan. Finance providers understand that not everyone or every business has a pristine credit history. But it is the responsibility of the borrower to be upfront, open, and honest about their situation. If you do not disclose past issues at the beginning of the relationship, the lender will be unlikely to trust you to repay your loan.

This same openness and honesty apply once a loan has been issued. If trouble occurs over the course of the loan term, alerting your lender upfront can make it easier for them to assist you and guide you through tough times. Furthermore, if you have developed a relationship with your existing lender, approvals can be simpler when you want additional loans from that lender.

Maintain Your Existing Equipment
You have paid a lot of money for the equipment you operate, so it is in your best interest to keep it running smoothly and efficiently. Well-maintained equipment results in fewer equipment breakdowns, lower repair costs, more available hours of operation, longer lifespans, and increased revenue.

But, how does equipment maintenance relate to financing? Because proper maintenance can extend the lifetime value of your equipment. For example, trucks in your fleet, can be used as collateral on a working capital loan. The higher the value of the equipment, the more cash you can borrow on a refinance or working capital loan.

Optimize Your Fleet
It is always great to have shiny new equipment available, but purchasing all new trucks and containers every year is simply not feasible, nor is it cost-effective. There are ways to optimize your truck fleet to get the most out of each unit and prolong its operational life. Fleet management technologies and techniques include:
• GPS Tracking—Having a GPS (global positioning system) in each truck allows you to improve route planning, reduce the number of miles a truck drives, reduce fuel consumption, and reduce long-term maintenance costs.

• Telematics—Telematics provides real-time monitoring of vehicle information, including engine performance, tire pressure, fluid levels, and more, providing insight into future problems and allowing you to perform predictive maintenance to extend the life and value of your equipment.

• Lifecycle Management—If your fleet and service areas are large enough, you can rotate equipment as it ages. Newer, more efficient, and reliable equipment should run the longer or more critical routes, and older equipment should run the shorter routes, or serve as spare equipment in case a truck breaks down.

Much like general equipment maintenance, these practices extend the lifetime value of your equipment, helping maintain equity longer. In addition to the enhanced equity value, being able to operate a piece of equipment for a year or two longer reduces the need to purchase equipment as often, thus improving your overall profitability.

Get Pre-Approved
Many companies do not consider the method of paying for new (or new to them, aka used) equipment until the purchase deal has been negotiated. Much like a mortgage pre-approval, understanding your potential payments and the total amount you can afford to spend on the equipment could help in negotiations or, at least, help speed up the process. Especially if you are purchasing at an auction, where speed is very important, having all your paperwork and documentation, including a pre-approval letter, at the ready could give you a leg up.
Furthermore, going through the process of pre-approval could alert you to any issues the lender might come across, or highlight any questions they might have concerning your business and need for equipment.

Use Your Lender as a Resource
Your equipment finance reps have a wealth of financial experience and can help walk you through various financing scenarios—loan types, finance structure, term lengths, down payments, etc. If you share your business goals and challenges with them, they can help craft an equipment financing plan that best meets those goals.

Ideally, you should work with a lender who is familiar with the waste industry and has waste equipment knowledge. These folks often have industry contacts across their areas, states, and sometimes across the country. Whether you are looking to purchase a specific type or piece of equipment, need to sell off machines to reduce your fleet, or want to work through various financing strategies, if they have waste industry experience, these folks can help.

Financing should not be an afterthought. It can be part of your operating strategy to ensure you have the right equipment when you need it. | WA

Julie Murphy is VP of Marketing at Commercial Credit Group Inc. She has two business degrees, but learned about budgeting and household finance from her parents. Julie has managed budgets as high as $6 million and absolutely hates to waste money. She joined CCG in 2016. She can be reached at jmurphy@commercialcreditgroup.com.

CCG’s team of waste experts is happy to discuss options and devise solutions that make the most sense for your business objectives. For more information, visit .

Sources
www.commercialcreditgroup.com/blog/importance-equipment-maintenance
www.commercialcreditgroup.com/blog/capital-investment-waste-companies#LifecycleManagement