Annual percentage rate (APR). Prime rate. Origination fee.

Dizzy yet?

Don’t be; these terms are important to understand if you plan to seek any form of financing.

Here’s the deal:

In 2015, the process of financing a business is still quite daunting. It’s definitely not due to a lack of options as there are many of those. Grants, government loans, bank loans, finance companies, even loan sharks can all offer ways to help raise the initial cash flow required for a new business.

But knowing where to look is only the first step. With so many different payment structures and lending policies, most of these options can get complicated quickly. The ensuing confusion leads many business owners to make bad business choices.

One way around this dilemma is to address spending at the planning stage. Reducing the estimated outflow can help; especially if that initial outflow is limited. Consider these expenses for a distribution centre:

• 10 2015 models of a VNA forklift.
• 10 full-time employees from the get go.
• A long lease on a 5,000 sq foot space.

Expensive, right? Yet these are only some of the common cash outlays that a new distribution centre business can make. Maybe you are not a new business and simply want to upgrade existing equipment, it will still cost money. Money that may not be present in the business at that moment in time.

In certain industries, e.g. healthcare or aviation, only peak performance of all equipment is acceptable; hence all equipment must be new. Buying new perks like:

• a manufacturer-supplied warranty.
• after-sales repair.
• potential discount from manufacturer.
• in some cases, even superior aesthetics.

But not every business owner has the cash at hand for brand new equipment. At this point, buying second-hand becomes an option. While it’s an excellent choice, here’s the kicker:

Should you buy used & refurbished racking?

If the use of these terms confuses you, you’re not the only one. Suppliers use these terms interchangeably, leaving buyers wondering which option best fits their needs. A lot of our customers also ask the same question; some even think they are the same. Be rest assured that there is a big difference as the the terms indicate two different standards.

Used Equipment.

All used equipment; computers, forklifts, racking, pump trucks etc., come from being owned and used by someone else. Due to a company upgrade or maybe bankruptcy, there’s a need to sell the equipment.

The equipment is often sold as-is; this means there has been no professional inspection, there’s no warranty or after-sales service included in the purchase, in some cases, the buyer even has to arrange for the system to be dismantled and moved.

While there is the benefit of used equipment being very cheap to buy, how can you be sure of the quality? You’ll simply be taking the sellers word for it.

Refurbished Equipment.

These constitute any equipment that MAY have been used and returned or was returned unused. Goods like computers, get returned by customers who may have bought them based on want rather than need. At this point, the supplier cannot resell it as new; especially if the packaging has been opened before returning.

The supplier has to check the computer and ensure it’s in good working order. Only then can it be repackaged and sold on as refurbished. This allows refurbished computers, to be sold for up to 15-35% less than brand new ones.

How does this translate to the shop floor? There isn’t much difference. Material handling manufacturers also receive returned goods that are in good working condition and have to find ways to sell them. Where it is required, they:

• Repair any damaged uprights and crossbeams.
• Replace any missing anchor bolts, safety bars or safety pins.
• Coat with anti-rust and repaint them.
• Test them to ensure they can still hold the required weight.

This effectively ‘resets’ the racking to factory quality standards; thus the buyer is getting an almost-new model at last years’ prices.

While refurbished racking may now sound like the best possible option, buyers should always contact the seller before making purchases, especially if the purchase is made based on photos seen on the Internet.

Some other questions to ask include:

• Is there any guarantee given on the refurbished shelving?
• Do you have professional installers that will come and fit out the space?
• Do you offer any after-sales repair?

For companies keen on minimising cash outflow, buying refurbished storage options can be one way to stay efficient whilst minimising expenditure.

Monarch Shelving is a premier dealer of custom warehouse solutions. Whether you want brand new shelving, refurbished racking or used storage bins, We are your one-stop shop in the North West.