Why paying cash isn’t always king

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This is an excerpt from Business Spectator’s new short course on Financing Growth. Click here to read the rest of the article, plus the remaining nine articles in the course.

Why paying cash isn’t always king

There is an old saying that cash is king.

But that isn’t always the case. In fact, businesses that pay cash for capital equipment are getting no real benefit for wasting a valuable resource that is not easily replaced. Companies that pay cash for capital equipment are utilising their working capital and risk not being in a position to have cash available for strategic purposes, ones that offer the business a real advantage.

Over five years, if you consider the opportunity cost of using cash against the finance costs in stand-alone equipment finance, the outcome is almost the same. This begs the question: why use cash and lose the advantage of having it available at a real time of need?

Click here to read the rest of the article, plus the remaining nine articles in the course.