The video starts with the narrator saying that the notion of you should always pay cash for IT equipment is more fiction than it is fact. He mentions that liquidity is crucial for the sustainability of a business. Scaling your business on reinvestment of business earnings and personal savings alone, especially in the early stages, is a bit far-fetched.
At some point, you will need capital from an outside source to facilitate the scaling of your business.
There are several benefits of financing instead of cash to pay for equipment. For example, it takes much more time to save up for equipment than it takes to come up with a deposit for financing. Saving could result in significant costs associated with waiting.
Most businesses fail simply because they run out of cash. Maintaining liquidity and growing a rainy day fund are crucial for the success of your business. Another reason you should go for financing is taking a loan out establishes business credit. While there are benefits presented by paying cash for IT equipment, the business should be able to support the purchase, and be willing to deal with the associated risks.
