Leasing enables you to utilize your capital for optimum return. While some operations require computers, bookkeeping systems, word processors or new telephone systems to ensure efficiency and competitiveness, other more hardware-intensive operations need production equipment and industry specific equipment. Acquisition of these requirements via leasing preserves cash that can be used for raw materials, work in progress, inventory, advertising, as well as other productive items, or cash that may avert tremendous hardship if some unexpected crisis should occur.
Leasing provides up to 100% financing and avoids the necessity of pledging existing assets such as inventory or receivables for security. Leasing can in fact elevate your credit ceiling.
PROTECTS ESTABLISHED LINES OF CREDIT
Companies often have expenditure restrictions, and in such cases, a lease provides the means to deal with these restrictive covenants while obtaining needed equipment. A lease term can be tailored to meet budget requirements or accommodate restraints.
PROVODES HEDGE AGAINST INFLATION
A fixed-term lease removes the fear of cancellation or recalls like bank borrowings. Once a transaction is finalized, the cost and monthly cash requirements are fixed and unaffected by changing general interest rates. This is especially meaningful during periods of fluctuating rates and potential instability.
PROVIDES ALTERNATE FINANCING
A lease payment is a fixed payment. As inflation mounts, the lease costs remain stable. In fact, if inflation persists, you are paying for today’s equipment with tomorrow’s less valuable dollar.
A lease payment is fully deductible as a business expense, and often provides a faster write off than capital cost allowance via ownership. This generally improves your cash flow and results in leasing being less expensive than ownership.
Advances in technology are being made so quickly that what is new today may be obsolete in a few years. A lease program of planned replacement enables you to obtain maximum efficiency from your equipment. Through a lease, you pay for the use of the equipment rather than the ownership. It is through use of equipment that profits are generated.
OFFERS TAX BENEFITS
Corporate, divisional or departmental budgets can easily be determined (as can operating projections) when equipment and operating costs are fixed. It is much easier to approve a small monthly payment than a large capital expenditure. Through leasing, you can have vital equipment immediately without waiting for budgeting delays or head office approvals.