About 70 MBA students from the University of Colorado Boulder last month headed eight miles down the road to Key Equipment Finance's offices in Superior to hear Adam Warner, president, and Deborah Brady, chief financial officer, share their insights on the $1 trillion equipment finance industry.
Utilizing the Guest Lecture Series from the Equipment Leasing & Finance Foundation, Warner and Brady explained to the students that American businesses, nonprofits and government agencies each year invest more than $1.584 trillion in capital goods and software (excluding real estate).
Most businesses require equipment in order to operate and grow and, for a majority of businesses, equipment financing is a key acquisition strategy, Warner told the group. Domestically, equipment finance accounts for $1 trillion of business each year. Nearly eight in 10 businesses use at least one form of financing (excluding credit cards) to acquire equipment, and some 67%, or $1 trillion, is financed through loans, leases and other financial instruments.
The students also learned why equipment finance makes sense, and how a lease compares with a loan.
They were shown the benefits of financing, including:
- Conservation of cash
- 100% financing
- Preservation of capital
- Hedge against inflation
- Improved expense planning and business-cycle flexibility
- Regular technology updates
- Tax considerations
- Relationship with equipment experts
- Obsolescence management
- Product and service bundling
- Equipment disposal
Warner and Brady also shared Key Equipment Finance’s market profile and background on upcoming lease accounting changes taking effect in 2019.