How to budget for your next CNC machine

March 13, 2017

Good CNC machinery isn’t cheap. You can pay as little as you want. But it’ll cost you in terms of quality and service. You’ll have things breaking down sooner than you’d like. That leads to disruption in production and that costs even more money and time.

So, you’re going to have to make your decision and live with the consequences. But, finding a quality CNC machine usually means you’re going to have to spend a little more up-front (and less over the long-haul).

Here are some ideas for budgeting for that new CNC machinery you want:

1. Start with a Used or Inexpensive CNC Machinery and Upgrade Later

Some businesses don’t want to take on additional debt. If that’s the case, you can consider limping along on a less-than-ideal CNC machine that keeps quality high, but maybe doesn’t make production speeds as efficient as you’d like.

Consider starting with a used machine, or an inexpensive version of what you really need. Once your revenues ramp up, then consider when’s the right time to purchase a high-end machine that quickly produces quality parts.

2. Consider Asset-Based Lending or an Equipment Loan

With asset-based lending (ABL), you can borrow around 75-85% of the value of your company’s accounts receivable. Inventory, equipment, real estate, and other assets can be used as collateral. But keep in mind; you’ll have to exercise discretion so you don’t put yourself in a high-risk situation.

Equipment loans are more stable and predictable. You simply make monthly payments and if you’re a financial conservative, you pay off the balance of the loan once you have the money available.

3. Take On More Work and Pay Your Employees Overtime

You know the quality of your current employees and the results they can provide. Some might happily work overtime at this point. Take a survey and see who would be willing to do so.

Forcing mandatory overtime of course works. But you’ll have happier and more productive employees if you give them the option to work overtime.

Tell your employees why you’re doing this and how long you’re approximating you’ll need them to work overtime. It could be a great way to raise extra capital without taking on additional debt.

Sometimes, you just have to be creative in business to make things happen and you might try one of these three approaches to get the capital you need to move yours forward.

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