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On An American Cliff

Following the US Presidential election, we heard a lot about an impending 'fiscal cliff' for the USA and how that threatened to negatively impact an already unstable world economy. For those who weren't familiar with what 'the cliff' was or what it implied, here's a simplified explanation. The term referred collectively to a number of US tax and budget policies that were put in place as default provisions. They were intended to only come into effect if the conflicting political bodies could not agree on something better. These default policies were intentionally drafted to be onerous and unpopular to motivate lawmakers in Washington to compromise and come up with solutions to deal with the country's growing deficit problems.

Had they failed to reach a deal, there was a very real possibility that the US would have fallen back into recession, causing a ripple effect in other countries. In the end however, the strategy of the cliff worked and a last minute deal was achieved on new tax policy. The H.R. 8: American Taxpayer Relief Act of 2012 was actually passed retroactively on January 3rd and includes a few key points that are significant for US businesses and those involved with selling commercial equipment.

For many American companies, the incentive programs and deductions to taxable income will leave them better-positioned to hire new employees and invest in their operations. After a long period where enterprises have been reluctant to invest in new machinery and equipment, it's expected that political stability combined with the tax incentives will finally lead to a rapidly improving US economy. One that is keenly focused on improving productivity. Pent up demand from several years of deferring upgrades is expected to be released and equipment manufacturers and dealers should see much stronger sales activity.

The year 2013 could be a great one for equipment sales reps, however it will be important to keep a close eye on order lead times and encourage customers to act earlier in the year to avoid missing out on the tax incentives deadlines. New equipment must be put into service prior to December 31st to qualify for the Section 179 deductions.

Making effective use of sales financing this year will also be vital for increasing order volume. The firms that these tax incentive programs target will be reluctant to part with their working capital during a period of strong growth. Westport offers special finance plans that will help them get the capital they need to add new equipment, but also to acquire it in a manner that will meet the guidelines for the available incentives. Some businesses will have the opposite problem. They'll need to use leasing to help them manage the total value of their new equipment acquisitions. Once they get to the expenditure caps, they will lose the Section 179 benefits if they add anything else that's not provided under a true tax lease.

For those who sell to American customers, everything is lining up for what may be a once-in-a-lifetime opportunity. We encourage you to learn more about these special tax incentives and how they make your products more affordable for many of your prospects. If you have any questions on how to incorporate this information into your sales strategies, or how to use Westport's services to help you win more business, we invite you to contact us for more information.

© 2013 Westport Leasing Corporation


Westport Leasing Corporation
11198 - 84th Avenue Box 33026
Delta, B.C. CANADA V4C 2L7

Phone: (604) 681-1260 | Toll Free: 1 (800) 667-0747
Fax: (604) 681-1680 | Toll Free Fax: 1 (800) 667-4426