Buying Equipment: Test the Cash Timing First
Before buying equipment, add the purchase, installation, training and disruption costs to your cash forecast. Compare buying now, waiting and any genuinely available staged-payment arrangement on the same dates. Check the lowest cash balance and the payments still outstanding, separately from expected profit improvements or possible tax deductions.
What you’ll get from this guide: For owners considering equipment: compare the timing trade-off without treating a profitable purchase as automatically affordable.
Include installation and the costs of using the equipment
Gather the purchase quote, delivery, installation, accessories, staff training, servicing and any temporary loss of productive time. Check what the supplier includes and what you must arrange. If the machine replaces an unreliable one, include realistic repair or hire costs in the delay scenario.
Business Victoria's equipment-purchasing guide discusses reliability, maintenance and downtime alongside the price. The cash comparison below isolates timing; it isn't a quote or a recommendation to finance equipment.
Compare three schedules on one forecast
Assumptions: AUD total cash payments; no tax benefits or borrowing assumed. Opening cash $22,000. Ordinary net cash inflow $3,000 each month. Equipment $15,000 plus $3,000 setup. Staged terms are hypothetical, interest-free and assumed agreed with the supplier; both instalments are included.
| Month | Buy now: $18,000 in M1 | Delay: $18,000 in M3 | Stage: $10,500 in M1 and $7,500 in M3 |
|---|---|---|---|
| 1 closing cash | $7,000 | $25,000 | $14,500 |
| 2 closing cash | $10,000 | $28,000 | $17,500 |
| 3 closing cash | $13,000 | $13,000 | $13,000 |
| Lowest balance | $7,000 | $13,000 | $13,000 |
Original ASBG worked example. All businesses, amounts and scenarios are fictional. The table contains the same figures as the visual.
If the owner's chosen floor is $10,000, buying now falls $3,000 below it in month 1. The other schedules remain above that floor under these assumptions. All three finish with $13,000 because total cash costs and ordinary receipts are identical.
The staged option pays half the $15,000 price plus all $3,000 setup in month 1, then the remaining $7,500 in month 3. Calling it “half upfront” without including setup would overstate available cash by $3,000.
Add the consequences the simple table leaves out
This comparison assumes the equipment produces no additional receipts within three months and delaying it causes no extra cost. Replace those assumptions with your evidence. For example, $2,000 of temporary hire while waiting reduces the delayed option's final cash to $11,000.
If earlier installation generates additional work, date the costs and customer receipts rather than adding the sales value immediately. The pipeline cash guide helps separate orders from money collected.
Extend the forecast through all remaining instalments. For an actual lease or loan, include establishment charges, repayments, interest, residuals and other contract-specific amounts, and compare total costs as well as the initial payment. Obtain advice on the terms rather than inferring suitability from the lowest monthly outflow.
Keep the tax question separate
A deduction isn't a dollar-for-dollar refund of the purchase price and doesn't put cash in the bank on delivery day. Don't assume a particular tax benefit or timing in the purchase decision. Our asset write-off explainer introduces the separate eligibility question; ask your accountant to confirm treatment for your circumstances before adding any tax effect.
Make the decision against a current floor
Revisit the cash-buffer target and upcoming large bills. Check daily timing around the purchase, not just month-end totals. A deposit can leave before the month's $3,000 net inflow has arrived.
Key takeaways
- Include the costs of getting the equipment into use.
- Compare identical periods and show every remaining payment.
- Test cash affordability separately from profit and tax treatment.
Where to get help
Ask your accountant to review the business case and your lawyer or relevant adviser to explain unfamiliar finance terms. Use the cash forecast to check the payment dates against the rest of the business.
Where to go from here
Set a Business Cash Buffer from Your Actual Risks
Set a cash floor based on the risks you have identified.
3 min readPlan Annual Business Bills with a Reserve Schedule
Fund known annual bills separately from emergency reserves.
2 min readTrack Overdraft Headroom and Return to Credit
Continue the “plan the payment” reading sequence.
3 min read
General information only. This guide doesn't take your personal or business circumstances into account and isn't financial, legal or tax advice. Rates and thresholds change — check the official sources linked in this guide and get qualified advice where your circumstances require it.