4 Equipment Financing Success Metrics to Track

4 Equipment Financing Success Metrics to Track

4 Equipment Financing Success Metrics to Track

Understanding the success of equipment financing is crucial for any organization, which is why we’ve gathered insights from top executives, including CEOs and directors. From tracking ROI and maintenance costs to monitoring utilization, discover the four key performance metrics these leaders use to navigate the complexities of equipment financing.

  • Track ROI and Maintenance Costs
  • Review Financing Rates Quarterly
  • Calculate Equipment Downtime
  • Monitor Utilization and Debt-Service Coverage Ratio

Track ROI and Maintenance Costs

Return on Investment (ROI): The most direct indicator of success is whether the financed equipment is generating a good return on investment. This involves comparing the revenue or cost savings generated by the equipment to its total cost (including financing costs).

Utilization Rate: This measures how frequently the financed equipment is being used. If the utilization rate is low, the investment may not be worthwhile.

Maintenance Costs: Keeping track of maintenance costs can help companies understand the true cost of owning and operating the equipment. Significant maintenance costs might indicate that the equipment is not as cost-effective as initially thought.

Michael DionMichael Dion
Chief Finance Nerd, F9 Finance

Review Financing Rates Quarterly

Key metrics I track include acquisition costs, interest rates, debt terms, maintenance expenses, utilization rates, and profit contribution for financed equipment. We aggregate this data in dashboards and review it quarterly to identify issues and opportunities to optimize our financing program. Detailed tracking and analysis of these metrics allow us to make informed decisions on future financing options and structure deals to maximize ROI.

Gideon RubenGideon Ruben

Calculate Equipment Downtime

The one big unknown for us with our equipment is maintenance. Moving trucks are pretty interchangeable when it comes to performing their function. As long as we have enough raw volume in the right mix of sizes for the market we’re operating in, we know we’ll get our money’s worth from our trucks–as long as they’re not in the shop. We are laser-focused on downtime as our main equipment KPI, and tweak everything from our parking guidelines to the mix of freeway and city miles in our routes to be as gentle on our trucks as we can.

Nick ValentinoNick Valentino
VP of Market Operations, Bellhop

Monitor Utilization and Debt-Service Coverage Ratio

In managing equipment financing, key performance metrics I closely monitor include the Return on Investment (ROI), the Equipment Utilization Rate, and the Debt-Service Coverage Ratio (DSCR).

ROI provides insight into the profitability of the investment, ensuring the equipment contributes positively to our bottom line. The Utilization Rate helps assess how effectively the equipment is being used, indicating whether we are maximizing its potential.

DSCR is crucial for evaluating our ability to cover loan payments, maintaining a healthy balance between debt and income. Regularly tracking these metrics ensures that equipment financing aligns with our organizational goals and financial health, making it a sustainable and successful part of our growth strategy.

Scott DistasioScott Distasio
Florida Accident Lawyer, Distasio Law Firm

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