What term should financing be for?

Much is often discussed about the type of financing that a practice chooses.    Another very important point is the term of the financing.   Current financing terms vary greatly, with repayment terms of 3 months to 5 years in most cases, even longer in other cases.

The effect of the payment on the company's monthly cash flow should be one of the most important factors.    Also, the payment should be considered in the context of whether the company may borrow again in the near future.    If a company thinks they may very well borrow again in the near future, then getting the lowest monthly  payment may be in their best interest.

Even though such an approach will cause the borrower to have the highest total repay amount of all the choices,  if this allows the borrower to take advantage of lucrative future opportunities, this may well be the best decision.    Future opportunities which may generate significant income over the course of years that a practice does not want to miss out on, such as a Digital X-ray, may require additional working capital the practice does not have, and require additional borrowing.