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Technology financing as well as 'Cleantech' Energy Leasing and Finance is a growth sector in Canadian financing and exhibits a strong need for solid financial solutions. Let's examine what you need to know in terms of key fundamentals in acquiring tech and energy assets.
If you are a client that requires constant asset acquisition in areas such as computers and peripherals, electronics, IT Services, Medical Equipment... etc. you need to be aware that financing decisions you make in fact can be as important as the asset you acquire. It's obvious to many business owners and financial managers in Canada that paying cash for major projects in Cleantech and technology acquisition either doesn’t make sense or in fact, is simply not possible.
The hard reality is that due to different tech and cleantech asset types no one finance firm or specific solution will suit all your needs. That's why in Canada, where the financing choices are simply less available than those in the U.S. it’s important to understand who the players are in the asset category you are choosing to finance.
Projects in IT (information technology) as well as the Cleantech area tend to require huge amounts of cash and have significant tax and tax credit implications. It's strongly predicted that energy and carbon tax credits will one day in fact become financeable themselves.
The carbon tax will are levied on all fossil fuels, including gasoline, diesel, etc... and in some progressive provinces, such as British Columbia, plans are already in place to have funds collected that will in fact be ' returned ' via tax credits.
The risk in both managing and staying on top of technology assets as well as Cleantech assets is a formidable one for Canadian business.
When you enter into a financing arrangement for either IT or Cleantech assets you clearly want to understand how they will be used by your firm, and for what duration. The proper financing of these assets in fact can become a competitive strategy.
The issue you should consider in technology finance includes your ability to upgrade during the term of the financing arrangement or lease. Proper 'cost of ownership models' in both Cleantech and tech finance can be valuable from a viewpoint of return on investment. allowing you to also consider the implication of all those related items such as software, training and support, environmental costs, etc. Very basic lease vs. purchase analysis can often help your financing decision and aid in the proper solution. It’s a simple matter of adding up all your costs and then ensuring your cash flows and cost of capital makes sense relative to the investment you are making.
Technology financing makes sense because it addresses the issue of cost, gives you flexibility, and provides rates, terms and structures that make sense to your financial situation and goals.
What is, then, your first and best bet in technology financing and Cleantech finance. Quite frankly it’s simply vendor or manufacturer financing. The ability of the manufacturer or vendor to provide financing to you cannot be overstated. But on the other hand, 2nd best is often a better solution in Canada – that is .. aligning yourself with an independent unbiased financing solution allows you to escape from the 'control' that a manufacturer's financing asserts.
That is why we often recommend to clients that they consider expert business financing assistance that is unbiased relative to your tech asset pricing, allowing you to eliminate many of the limitations that are placed when you align yourself with any one specific vendor. Flexibility and added expertise can save you thousands, even hundreds of thousands of dollars depending on the size of your project.
One size fits all does not work in technology financing and cleantech energy finance. Seek a customized independent financing solution that provides a comprehensive finance solution for your tech and Cleantech asset needs.
technology financing cleantech energy finance
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' Canadian Business Financing With The Intelligent Use Of Experience '
STAN PROKOP
7 Park Avenue Financial/Copyright/2024
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Stan Prokop is the founder of 7 Park Avenue Financial and a recognized expert on Canadian Business Financing. Since 2004 Stan has helped hundreds of small, medium and large organizations achieve the financing they need to survive and grow. He has decades of credit and lending experience working for firms such as Hewlett Packard / Cable & Wireless / Ashland Oil