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Options for Financing Capital Expenditures

 
  Arthur F. Rothberg, Managing Director, CFO Edge, LLC  
   
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  Article Summary  
In a recent article, we discussed the importance of devising a strategic plan for how you will allocate your company’s capital expenditures (or CAPEX) budget. Such a plan should detail what physical assets should be acquired and when, how they will be used, their expected ROI and/or payback period, and how the assets will be paid for.

The last point is especially critical, because all the benefits that may be accrued from making wise CAPEX decisions can be diluted or even negated if the wrong CAPEX financing strategy is used.

This article reviews three primary CAPEX financing methods (internal financing, external financing via a bank loan, and external financing via an equipment lease) along with benefits and limitations of each.

Deciding how to finance assets is a critical part of a strategic CAPEX plan for Los Angeles and Southern California CEOs and CFOs. If you need assistance in determining the best CAPEX financing option for your business, an outsourced CFO services provider may be able to help. Such a provider can share expertise gleaned from helping businesses similar to yours meet their CAPEX financing challenges.

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