Used Equipment can be an economical way to expand capacity and productivity without breaking the bank. Thanks to reduced costs and faster lead times, purchasing pre-owned machinery may provide faster return on investment than newer options.
Used machines can bring tax benefits. Your accountant can help evaluate these advantages to determine whether purchasing secondhand is suitable for your company.
1. Reliability
Equipment reliability is an intricate concept that necessitates expertise at both the design and operational stages. To be effective, equipment reliability requires balancing engineering principles with performance requirements suited for specific contexts and applications.
Redundancy is one of the best ways to increase reliability. For instance, plants with single large oil pumps can mitigate any possible failure impacts by having an identical-sized standby pump as backup. This strategy may also work well when applied in other settings like water treatment facilities.
When it comes to selling used equipment, there are various avenues available. Dyan Jayjack, Senior Manager of Strategic Initiatives at Henry Schein explains that overstock equipment, overused demos (sometimes referred to as open box products), and tradeshow models are the three primary categories available to businesses; each has their own advantages and disadvantages.
2. Tax Breaks
Businesses can take advantage of tax breaks when purchasing used equipment that depreciates over time, thanks to changes made possible by the Tax Cuts and Jobs Act. Small businesses can now deduct 100% of eligible equipment costs at once through Section 179 expensing or 100% bonus depreciation, saving time on tax filing.
Every dollar counts when it comes to turning a profit for businesses, and purchasing and using equipment often accounts for much of this profit.
Yogi Berra had it right when it comes to equipment purchases: “It’s better early than late.” As such, many companies wait until later in the year (typically November and December) before making large Section 179-qualifying equipment purchases with financing available – providing cash-flow benefits while optimizing your write-off of equipment this year.
3. Value
Industrial equipment depreciates quickly – like cars. By purchasing used equipment from someone else who has experienced its depreciation first-hand, you can find much cheaper deals than when purchasing new.
Understanding what factors determine a piece of equipment’s value can help you make more profit when selling. Some key ones include:
Hours – The number of hours on a machine can have a considerable effect on its resale value, especially when considering well-maintained machines with few hours on them. Low hours typically translate to increased asking prices.
Condition of Machine – Determining this aspect can be difficult due to subjective interpretation from different appraisers; nonetheless it remains an integral factor when it comes to appraising equipment that requires extensive maintenance or servicing costs.
4. Flexibility
Selling used equipment can help businesses reduce expenses while simultaneously upgrading their fleets. By selling older machinery at a fraction of its original cost and offloading depreciation to another entity, businesses can find nearly new machines at significantly reduced prices while someone else absorbs any depreciation costs associated with ownership.
Businesses often purchase used equipment from private parties online marketplaces. Businesses should carefully inspect equipment and research pricing when buying from individuals as well as ensure the seller holds clear title for what they’re selling.
Renting equipment can save companies significant sums over time by eliminating ownership, maintenance, logistics and disposal expenses. Furthermore, renting allows businesses to access equipment they would not be able to afford without making a large upfront investment – further helping reduce inventory levels and work-in-progress levels.
