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October 20th, 2017
Outdated Equipment Can Affect the Bottom-Line:
A pitfall many operations managers run into is keeping old and outdated equipment in service past its recommended service life. Continuing to pay to update and repair outdated equipment is costly. Old equipment can be similar to driving a car that needs more repairs than it’s worth. We’ve all been there, so this is a good example that most people will understand. Sometimes, it is better to upgrade to something newer and more reliable. Warranties are also included with most new models of equipment. The following examples are also ways businesses benefit from new equipment.
New Equipment Qualifies for Section 179 Depreciation:
Once an asset has been fully depreciated, there is no tax benefit for the business. Section 179 deduction allows businesses to deduct the cost of their new equipment from their tax filings. Please advise your operations team to speak about this topic directly with their accountant or controller. Each business may have different circumstances and needs.
Employees Doing the Work Suffer:
Old and outdated equipment makes employees have to work harder than necessary for their normal jobs. By running an outdated piece of equipment, it can be physically and mentally stressful to employees – creating operational inefficiencies and increasing employee turnover.
Pairing the right equipment with hard-working staff can make all the difference in completing a the job: whether cleaning a large facility, repairing a car, or surveying a construction site. No employee wants to get stuck using the old piece of equipment that barely does the job.
Break Upfront Costs into Payments:
Choosing the right terms can help overcome financial hurdles if a business has a limited budget. Seeing the cost of the equipment spread out over the course of months or years can help make a decision more straightforward.
Remind yourself that leasing or financing can help maintain an operational advantage.