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Benefits of Leasing
In addition to capital conservation, leasing provides businesses with some of the benefits outlined below. Some of the following points will apply to your business. Some will not. The point is to alert you to some of the hidden advantages of leasing.i
(#1 REASON Why 4 out of 5 North American Companies Lease Equipment)f
Leasing…. Improves Cash Flowthe following
Leasing provides 100% financing with no required down payment. Lease payments are a fraction of the total purchase price. No compensating balances are required and lease payments can be scheduled to coincide with income fluctuations.
Preserves Other Credit Sources
Leasing keeps bank lines and other sources available to meet short-term requirements such as inventory buildup and increased receivables.
Helps Hedge Against Inflation
Each dollar paid in lease payments five years from now will probably have substantially less purchasing power than today's dollar.
Keeps Money in Motion
By leasing, you can keep their money working for them. Consider what $100,000 can do when it is actively invested in inventory rather than languishing in fixed equipment.
Simplifies Budgeting
Budgets can more readily accommodate monthly lease payments than large cash expenses for purchasing fixed assets.
Offer Fixed Rate Financing
Leasing allows you to know exactly what their expenses will be over the term of the lease.
Helps the Equipment Earn Its Keep
Employees are expected to earn their pay as they perform-why not equipment? With leasing, you pay for the equipment as it benefits your business.
Lets You Choose the Equipment
You can specify the equipment you need, and the source-as if you were purchasing it directly. All normal manufacturer warranties are passed through to you.
Makes More Equipment Available
Since the monthly payment is a small portion of the total cost of the equipment, leasing allows you the use of a greater amount of equipment for the given dollar allocation.
Provide Flexibility
When structuring a lease transaction, the lease can accommodate requests by you for no money down, deferred and seasonal payments. Leasing can also be structured as step-up or step-down payments.
Offer Tax Advantages
Depending on the structure of the lease payments, you may be able to assume tax advantages on their new equipment. Your CPA or accounting firm can provide you with details.
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