Why you must Consider Leasing

A Better Alternative to Sustaining Your Business Finances

Many companies consider leasing options when they do not have sufficient capital to purchase the necessary equipment they need in starting or operating a business. In fact, 80 percent of businesses in the whole of North America use leasing for their capital equipment. Leasing removes the barrier for many business owners and startups, helping them achieve their financial plans and goals. When someone consider leasing, that person or business entity is choosing an easier way to protect their finances and assets as well.

Leasing is commonly known as creative financing, since payments can be used to project the cash flow of a business. Other than this, there are tax advantages that can be had when one considers leasing. The major attraction of leasing comes with 100 percent financing, where initial expenses are set at minimum. Leasing is also considered as a fixed expense and if you are going for a long-term lease, you might as well lock it to protect against inflation rates. In reality, growing your business needs financing and leasing lets you achieve your business plans without suffering your precious cash flow. This allows you to make deferred payments without the huge burden of an instant cash or lump sum payment.

Five Reasons to Consider Leasing

1. Increase in Cash Flow and Return of Assets

Since leasing provides you with full financing, minus the down payment, you can preserve your cash assets which could have been used to purchase your capital equipments in the first place. What’s great is that you can schedule your lease payment to align with your income flow, which will not over-burden you, specially when funds are short. Also, a leased asset will not appear in your balance sheet, which means that you will have better revenue reports which are assessed by company managers ( This is true if you are making an operating lease ). Since sales tax and other forms of taxes are paid out together with the monthly lease payment, you can simply preserve your capital asset.

2. Preservation of Existing Credit Lines

Since you don’t pay a down payment for your third party lease, you then allow new credit lines to enter, as well as preserving your existing ones. Your credit lines are comparable to your cash reserves and you need to preserve it to build your inventory and financial sheets.

3. Helps Keep Your Money in Place

Since leasing can be tailor-made to suit your budget, you can choose how you pay, depending on your estimated financial returns. Most leasing options are based on fixed rates which protect you against inflation rates. Leasing also helps you allocate a fixed amount of payment each month which is easier than making a capital budget plan approved. You can even use the income made from the use of new equipments you have acquired to pay for your lease, making money work for your business efficiently. When your money is kept in place, this can also mean more purchasing power for your business.

4. More Flexibility for Your Finances

To consider leasing means to have various types of options for your purchases. With leasing, you can easily upgrade, add specifications, or trade your existing capital equipment. Technology is the fastest asset that can depreciate and go obsolete in such a short time and many fear the risks of losing their equipment value upon sale. For this, leasing puts a distinction between what your equipment cost and what it can give you, making you avoid this pitfall.

5. Tax Benefits

Leasing can be your new ally when it comes to getting tax breaks where you can deduct your operating expenses. You need to talk to your tax or legal expert for advices on potential tax breaks you can have on your lease.

In the end, leasing gives you more purchasing power, helping you reduce your initial business cost. On top of these, you even get to own state-of-the-art equipments of your choice. With more cash and available equipment ready for your new business operation, you can definitely never go wrong with a leasing option. This is why many companies have chosen leasing as their means of making ends meet in these tough and uncertain economic times. Maximize Your Options!

RESOURCES:

Catalyst Financial Group Inc. “ 7 Reasons Why Leasing is a Preferred Method of Financing. “

http://www.catalyst-financial.com/pub/CFG_leasing_brochure.pdf

American Specialty Equipment Capital. “ Lease Vs. Loan. “

http://www.aseclease.com/whylease.html

Alliance Financial Group, Inc. “ Reasons to Lease. “ 2008.

http://www.alliancefinancing.com/business_solutions/leasing/reasonstolease.html

Merrill Lynch Business Solutions. “ Who Should Lease. “ 2008.

http://www.business.ml.com/BCPublic/Financing/EquipmentLeasing/WhoShouldLease/