Equipment Appraisal Blog | Understanding Machinery Appraisals

When precision tooling and machining is vital to your business' success, getting a quality CNC machine appraisal helps best protect that significant investment in your business' equity. But these machines are interfaced with a wide range of other tools and operate in a number of different environments, making it very difficult to determine exactly what your equipment values should be. Here are some of the considerations to keep in mind when getting your CNC equipment appraisals performed.

Protect Your Investment with a CNC Machine Appraisal

A Computer Numerical Control or CNC machine provides exact precision control of a wide range of machinery. It can operate mills, lathes, plasma cutters, wire erosion, water jet cutters, drills, routers, grinders and many other pieces of machinery to meet the exacting specifications of a wide range of projects. They can range in price from a few thousand dollars to well over $100,000 a piece, depending on the level of precision required and the size and specifications of the tools to be used. A certified appraiser should have experience in CNC machines due to their complex nature.

With this type of cost, it's easy to sink a significant amount of capital into these machines. When you have a certified equipment appraiser provide you with documentation of the equipment values, you can make better decisions about your investment. An appraisal might tell if your machinery is beginning to wear due to high hours. It might also tell whether the machinery has been well or poorly maintained, helping decide which used machinery to purchase for your business. If the market has been shifting, it may be able to tell whether you should invest in additional equipment or sell off excess CNC machines to ride out the storm of an industry downturn. 

If your business suffers a loss due to theft, vandalism or a disaster, having an appraisal on your machinery helps you get what your business needs from a reluctant insurance company. It helps you prove value if you're using your CNC machine as collateral for a financial institution if you're expanding your business or taking advantage of a new opportunity. A certified equipment appraiser can even provide a value for your CNC machinery after it's been damaged in a fire or donated to a charitable organization. But without having a proper machinery valuation in place, you may find that you're losing out on your business finances.

By getting a quality CNC machine appraisal, you can ensure that your business' investment is protected, whether you have an insurance loss while dealing with a difficult adjustor, need to document value when selling a business or the information you need to determine when it's time to replace aging machinery. But you need to make sure you're working with a certified equipment appraiser who has experience researching CNC machinery. A certified appraiser has the training and experience to prepare machinery valuation reports that are based on standardized methodologies and for that reason, will stand up to scrutiny in legal, financial and insurance circles.

When you're expanding or improving your business, it's important to understand the terms of your financing agreement. With changes in the banking industry since the 2008 recession and bailouts, many businesses are looking at bank financing collateral as a possible option to consider. But how does it really work and will it cause problems down the road for your company? In this post, we'll take a solid look at how equipment appraisals should be a part of your toolkit when approaching bank financing involving collateral.

How does Bank Financing Collateral Really Work?

Banks require collateral as an insurance policy, so that they can regain any losses from a loan default by selling the collateral to make up the balance due. Though immovable assets are typically thought of as assets such as real estate, large equipment that is difficult to remove may also be considered this type of asset. Smaller pieces of equipment or equipment that is more easily moved is considered a movable asset. The bank may require that you provide a high amount or all of these assets as collateral to secure a loan. But at the same time, you don't want to risk any more of your equipment, often the very source of your income, than is absolutely necessary. What can you do to both protect your interests in your business while providing the bank with the financing it needs? One possibility is through an equipment appraisal.

Equipment appraisals are reports prepared that calculate the value of a piece or a lot of machinery. If they're prepared by a certified equipment appraiser, the report will stand up to much higher levels of scrutiny than a report or general quote developed by a dealership or other party. Why? Because a certified appraiser is taught specific, standardized methodologies to calculate the machine's value, a report prepared by them is considered more accurate and reliable than other methods of determining equipment value. These methodologies have been scrutinized in legal proceedings, financial circles, insurance claims and tax agencies and have evolved into a nationally-recognized set of standards - the Uniform Standards of Professional Appraisal Practice (USPAP). 

When you have an accurate valuation performed, you have a solid figure you can take to the bank when negotiating the terms of your financing. Because the report has been provided by a certified appraiser, the bank officers know that it's an accurate representation of your equipment's worth. That means that you can choose which piece of equipment you're willing to put into the agreement as collateral and which ones to protect from risk.  An accredited appraiser through organizations like the American Society of Appraisers (ASA) with the Machinery & Technical Specialties (MTS) designation must provide unbiased appraisal reports that all parties can rely on.

As you can see, using machinery valuation as part of your process for agreeing to bank financing collateral requirements can help ensure that you're only putting as much of your business assets as are necessary. Using a certified equipment appraiser helps ensure that not only are you getting accurate equipment values, but that the valuation report with stand up to strict scrutiny by your financial institution.

A recent market study by Credence Research has projected that the mining equipment market will grow to $30.5 billion by 2023. But what does that mean for your mine and how do you determine equipment values in a changing market? One option to consider is a mining equipment appraisal and how you can use the information and insights in that appraisal report to take advantage of good opportunities without risking your business on a poor risk. Here's more information on how equipment appraisals can help you stay ahead of the curve:

Mining Equipment Appraisal: Where's Your Business as the Market Grows to $30.5 Billion by 2023?

But where is this growth coming from and how will your business meet these changing needs for equipment? Countries that are industrializing are demanding more coal and material goods. Even with developed countries implementing new recycling standards to make the most out of scrap metals, they can't keep up with the demand. As other countries continue to develop, the people have more disposable income and require more material goods to improve their standard of living.

As mining companies continue to grow, they demand more equipment to keep up production rates. Companies that have become stable in the industry are often shifting to more modern and energy-efficient equipment to lower their overhead and improve profitability. Improved worker safety regulations demand healthier equipment with less exposure to greenhouse gasses while they work. This demand is driving mining equipment sales.

When your mining company needs to update its equipment, it may be due to wanting a more efficient machine or better worker safety. But what will you do with the older equipment? One option to seriously consider is selling it overseas to the developing markets. Because they are still growing, they haven't necessarily reached the level of stability where they can purchase new equipment. But at the same time, the equipment that you're done using may sell for higher rates overseas where they're desperate for quality machinery than at home, where other mining concerns are selling their machinery for the same reason you are.

As the market shifts, it can be virtually impossible to determine where your mining machinery will fall in terms of value. Why? Because your job is to get coal, ore and other valuable materials out of the earth, not to try to sell your machinery. Many mining concerns find that hiring in an equipment appraiser with experience in the field is very beneficial. It allows you to determine not only which machinery to sell, but also at what time to sell it for the best possible profits. Because appraisal is all they do, the appraiser can determine a fair market value for your machinery based on current market conditions.

As you can see, by getting a mining equipment appraisal, you can decide better when to upgrade or replace your existing equipment while still getting top dollar for the second-hand machinery you sell. But part of the process is ensuring that you're working with a certified equipment appraiser. Why? A certified machine appraisal specialist has the knowledge, experience and methodology to ensure you're getting the right kind of appraisal for your specific situation.

When you work in health care, it can seem as though every week brings a new piece of equipment to your attention. Whether it's a new diagnostic tool, new therapy machine or something specific to your specialty, there's one thing that is almost always true: it's too expensive. But what if you could leverage the value of your older medical equipment against that total? As new technology is adopted, there's a limited window of opportunity between the time that the new equipment hits the market and the older technology becomes obsolete. How do you know when it's the perfect time to act and get the most from your older equipment while not paying the inflated cost of the latest and greatest? Medical equipment appraisal.

Update your practice with a medical equipment appraisal

When you talk to a medical equipment company, they may tell you that your equipment isn't worth much and that you need to upgrade immediately to take advantage of new technology. However, look at it from their point of view. They want to sell you new equipment and move your old equipment as quickly as possible. Without even looking that closely at what features your equipment may have or kits that have been added to the system, they're going to give you a low ball price on your old equipment to get it out of the way for the new equipment they want to sell you.

An independent machine appraisal specialist, on the other hand, has nothing to gain from the sale or purchase of equipment in your business. They don't have a commission riding on the final price. Their job is to take a good hard look at your equipment and use a solid methodology to determine your equipment values. They may even know about alternative markets where you could get better money for your equipment than the local businesses, such as going through the export process to sell older equipment to overseas buyers who will pay a premium to get good used equipment that's actually from this century.

There's one other thing that a professional machine appraiser will look at as well. Where is the equipment located? Though it's pretty easy for someone to say what the machine is worth, they may not take into consideration that moving it will require taking out that new partition wall because the other doorways in the practice are too small for it to pass through. In any situation, a qualified appraiser will mention these potential issues.

As you can see, getting a quality medical equipment appraisal helps ensure that you can get the most out of your older machinery while ensuring you can afford the cost to adopt new technology in your office. But before you go with just anyone, make sure the equipment appraiser is certified. Why? Certified equipment appraisers have been trained in standardized methodologies that will hold up to strong scrutiny, whether it's with an insurance company, financial firm or even in a court of law.

When you have manufacturing equipment that you're getting ready to replace due to age or needed upgrades, there's always a concern that you may not get what the machinery is worth. This can lead to financial issues with your company or perceived ideas that the machinery was sold for less than it should have been. How do you get what your equipment is worth when it's time to negotiate? A manufacturing equipment appraisal can provide you with the documentation you need to get a fair price.

Using a Manufacturing Equipment Appraisal for Negotiations

Many people assume that equipment appraisals are simply calculated based on what the market will bear. But what happens if you're only planning on advertising the equipment in your industry, which is currently in a slump? What about the market as a whole? Will there be additional costs for removal that need to be taken into consideration? These questions will all play into your initial asking price and the point from which potential buyers will negotiate. 

If, for example, everyone in your industry is inserting magnets into their plastic molds, does your machine have that capability? Added to the initial value of a machine without that capability, a retrofit or after-market kit may be required to add that feature. Machines that are left without that feature or that are incapable of being upgraded to include it may end up receiving lower final sales prices, because they won't keep up with the latest trends that newer, more expensive machines are able to contend with.

But what if you're not following the latest trends, because you provide more traditional means of production? Many companies find that hiring someone who professionally specializes in equipment appraisals has a finger on the beat of change in the industry. Hiring a well-qualified, certified equipment appraiser can mean the difference between knowing when to sell your machinery and when you're just going to be stuck with it.

Another area where businesses often take a hit on selling manufacturing equipment is by assuming its value is what the tax accountant says it is. The problem with that value is that machinery often ages faster or slower than the depreciation tables issued by your tax agency. If you have quality equipment you've kept in exceptional shape, you may sell it for less than it is actually worth, because it would still operate for several years after the equipment has been fully depreciated and shows a value of zero. If your equipment takes a beating because of your location, environment or manufacturing practices, it will probably fail before it is fully depreciated, which will lead to potential buyers backing out because your asking price is then too high for the expected useable lifespan, another measurement a good appraiser will calculate for you.

As you prepare for negotiations, having a manufacturing equipment appraisal ensures you can negotiate from a point of power, with documentation that your requested price is fair and reasonable. But are you working with a certified equipment appraiser? A certified appraiser uses a standardized methodology in calculating your machine appraisal report. This ensures it will hold up to scrutiny whether you're in the meeting room, the board room or the courtroom.