The first poll, conducted by GE Capital, was of 5,200 CFO’s in the Australian mid level market, and showed renewed confidence in the first six months of 2012, with main concerns being cashflow, managing costs and growing revenue.
The second survey by East & Partners, specifically of businesses turning over more than $1M using asset finance, found the main reason for using asset finance was ‘cashflow’ (62%), with ‘removing assets from the balance sheet’ being the second most popular reason.
The Australian Equipment Leasing Association has recently reported $40 billion in new business this year – a 15% increase over last year. The association attributed this not only to continued growth in the resources sector, but also noticed an increase in asset finance for the purchase of commercial vehicles, cars and trucks by small and medium sized businesses.
The last time these equipment financing levels were reached was in 2007, before the GFC kicked in when the association saw $43 billion in leasing. The GFC saw this figure reduce to $33 billion as businesses extended the operating life of existing equipment to cope with trading conditions.
There are some advantages to equipment financing for fast growing companies – with the right credentials a business is able to fund the purchase of an asset without having to put up other assets (eg privately held property) as collateral. This in turn allows the business to grow beyond what would be possible if finance were tied to the value of secured assets.
The Caterpillar 797F mining truck (pictured above) may not be the biggest truck in the world (that honour goes to the Terex MT 6300AC) but it’s up there! Pretty much every measurement and dimension on the 797F is plain massive: 7.2m high, 14.5m long and with a payload capacity of 400 tons (or 363 t).
It’s designed for the mining industry and packs a 24 cylinder common rail diesel engine with a displacement of 106 litres which generates 4000hp (or 2983 kW). For that you get a 68 km/h top speed which doesn’t sound too impressive until you realise it’s carrying 400 tons at that speed!
One of these babies will set you back $4-5M, depending on whether you’re ordering more than one. You could of course head down to an equipment auction and pick one up secondhand and save on the depreciation! Call us at Aussie Equipment Loans if you need to arrange your finance. More info on the 797F here.