Material Handling Financing

Financing Material Handling Strategies

In many industries upper management continually demands reduced costs for supply chain and warehousing operations.

Unfortunately, most warehousing operational improvements or expansions become capital projects that require bank financing or tap into precious working capital.

These projects typically have a long sales cycle due to the capital approval process and/or capital competition from other projects.

“By leasing, a material handling manager can do reasonable monthly payments instead of a prohibitive large payment.”

In many industries upper management continually demands reduced costs for supply chain and warehousing operations. Unfortunately, most warehousing operational improvements or expansions become capital projects that require bank financing or tap into precious working capital. These projects typically have a long sales cycle due to the capital approval process and/or capital competition from other projects.

The trend taking shape today for procuring warehouse equipment is to finance, lease or rent turnkey material handling equipment and warehouse systems. Some companies are actually choosing to buy or lease a new building complete with all the fixtures, tenant improvements and storage equipment installed under one master lease payment.

Advances in storage systems design, flexibility and durability are providing the opportunity for residual lease financing of racking systems. Imagine financing your storage system, forklifts and tenant improvements with one master payment plan tied into a building lease term and at the end of the lease receiving a guaranteed buy back and removal of any equipment remaining in the facility.
As warehouse improvement projects are considered, using lease financing can defer upfront costs while providing immediate benefit of increased capacity or increased efficiencies from implementation of the project.

The rule of thumb especially in low interest rate environments; if a purchase involves real property such as buildings or land, buy it, if a purchase involves personal property, equipment or fixtures, lease it.