CATEGORY 120 AUSTRALASIAN DENTIST FINANCE Amongst other things, the start of the year is a good time to review plans for the next twelve months. When it comes to your practice plans, new equipment purchases may be on your radar – in which case, you should take some time to ask (and answer) the right questions first. To get you started in this process, we have put together a list of five considerations when buying new equipment. 1. Why – are you upgrading current equipment, or adding new equipment? If upgrading an existing machine in your practice, you will be aware what income the equipment drives for the practice. Upgrading this equipment will ideally drive additional revenue through efficiencies that come with improved technology, provide better patient care or do both. If, however, you are purchasing equipment you have not had before, you will want to ensure it is going to add greater value to your practice, as well as provide better patient care. In this case, it is important to calculate whether the additional fee income this equipment is likely to generate will cover the cost of the machine – or rather how long it will take to do so. There is only one way to determine this, which is to do your research: understand what others in the field charge for services rendered by this equipment, calculate how many of these additional services you expect to provide in a week/month/ year and understand how this additional equipment improves your service offering overall. 2. Who – which equipment supplier do you choose? The best supplier for you will depend on your budget, what you need to get out of your supplier/equipment and which supplier/equipment you trust the most. When it comes to that last one, think beyond just the equipment – you need to know your best interests are being considered, that servicing and maintenance will be painfree and should something go wrong, the supplier will rectify it. Never underestimate the value of supplier relationships, especially if you find yourself in a difficult situation. 3. How will you pay for the equipment? Cash, credit or finance? Each option may have pros and cons, however business loans do have some strong benefits: u Avoid paying interest on post-tax dollars – money in a bank account has already been taxed, whilst a business loan uses pre-tax dollars. u Reduce your taxable income by the loan amount and reduce the overall tax you pay. u Enjoy additional liquidity and the freedom to use that cash for expenditures that cannot be financed. 4. What is the expected lifespan of the equipment? If taking out a loan for the equipment, matching loan terms with the equipment lifespan is important – you do not want to owe money on equipment that has to be replaced, whether it be due to changes in technology or just aging equipment. 5. When is the best time to purchase new equipment? This could depend on a variety of factors, such as your business cycles, supplier promotions that provide discounted equipment prices and tax time considerations. This is quite a broad question and requires you taking the time to consider your specific circumstances before making a decision. At Credabl, we can walk you through the different considerations necessary, so you can make the choice best suited for you. After reading this article, you should have an introductory understanding of the decisions to make when purchasing new equipment, or at the very least a good introduction to the topic. At Credabl, we’re experts in equipment (and many other) loans for dentists and can guide you through the process. u If you would like to speak to our team about finance, or would like more information, reach out on 1300 27 33 22. Disclaimer This article is a guide only and does not constitute any recommendation on behalf of Credabl Pty Ltd (ACN 615 968 100) or any of its related bodies corporate (Credabl). The information in this article is general in nature and we have not taken into account your personal objectives or financial circumstances or needs when preparing it. Before acting on this information you should consider if it is suitable for your personal circumstances. Credabl is not offering financial, tax or legal advice. You should obtain independent financial, tax and legal advice as appropriate. No information contained in this article is intended to be a substitute for professional medical advice, diagnosis or treatment. Purchasing new equipment – who, what, when, why, how?
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