Equipment Appraisal Blog | Understanding Machinery Appraisals

Lovely or Lemon? 4 Benefits of Chemical Processing Equipment Appraisal

Posted by Equipment Appraisal Services on Wed, Aug 12, 2015 @ 09:00 AM

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With the extreme volatility in world markets for inputs finally quieting down and becoming more stable, it's a great time to look at expanding your chemical processing business. Though this volatility caused the industry to contract instead of expand from 2010 to 2014, it's projected to expand by 0.7% annually from 2015 to 2020, making the relatively calm economic state we're currently enjoying a great time to expand your operation with better equipment and faster production.

The best way to upgrade your machinery at this time is by purchasing used equipment, because you'll have less equity invested if the industry starts to become explosive again. But without getting a chemical processing equipment appraisal, how can you tell whether that great deal you're looking at is a good equipment value or a lemon that's going to cost your money precious equity just as your company is getting back on its feet? Here are some ways that getting a chemical processing equipment appraisal ensures you'll get what you paid for out of the equipment you're purchasing.

4 ways a machinery and equipment appraisal protects your business

  1. An equipment appraiser can often spot a problem such as obsolescence. A qualified appraiser may recognize potential problems before you make the purchase such as model changes or manufacturers that have gone out of business. If these issues are caught early, you don't throw your money away on equipment a machine appraiser wouldn't recommend.
  2. You'll find out the actual equipment values, which gives you a powerful tool that helps you determine where to start negotiating price. Equipment appraisers are experts at determining what the value of your prospective machinery is currently in the market. If you don't know the market, you can't negotiate from a point of strength.
  3. Equipment appraisals provide a professional estimate of your equipment's worth that can be backed up by solid methodology, which is often required to get bank financing or to make insurance claims for losses suffered. Without a proper machine appraisal, you can't back up how much the machinery is worth and may end up with a substandard loan rate, insufficient funds to make the purchase or losing out on an insurance claim that could keep your business in operation. 
  4. A proper machinery appraisal gives you an appropriate starting point if you need to depreciate your machinery over time. Just because a machine has been completely depreciated by the business you're purchasing it from doesn't mean it has no value - as the hefty price tag would suggest. Having an appraisal gives you a starting point to depreciate the machinery on your own books, at a depreciation rate that reflects the machinery's value in your business as time passes.

These are the top reasons it's vital for the success of your chemical processing business to get a proper machine appraisal before purchasing used equipment. Make sure you have the prospective equipment you're considering appraised by a qualified appraiser who is accredited with the American Society of Appraisers following the Uniform Standards of Professional Appraisal Practice. If you don't make sure the appraiser meets these criteria, your chemical processing equipment appraisal may not be accepted as legal documentation of your equipment's worth.

Tags: equipment appraisers, processing equipment appraisal