Benefits of Leasing
Through leasing, you can enhance your company's ability to grow and make it more competitive. Other potential benefits include:
Improved Cash Flow: You can structure payments to parallel your cash flow or seasonal business cycle.
Immediate Use of Equipment: Monthly payments allow you to use your equipment immediately for a fraction of the cost of a purchase.
Flexible Terms and Payment Schedules: Leasing gives you the option to design payments to meet your cash flow cycle, reimbursement funding cycle or projected utilization. In a typical lease arrangement, terms can range from 12 to 84 months or more generally, the longer the term, the lower your monthly lease payment. (Fixed payments allow you to lock in payments now, so you can avoid the risk of inflation in the future.)
Inclusion of Associated Costs: You may be able to include 100% of the project including soft costs such as shipping, installation, software and training in your lease agreement. These costs can be apportioned equally over the term of the lease. This arrangement enables you to forecast your cash flow with greater accuracy since you avoid paying these expenses in one lump sum.
Protection Against Obsolescence: With today's rapidly changing technology, equipment frequently becomes obsolete within a couple of years or sometimes just a few months. Leasing allows you to turn the equipment back in at the end of the term and upgrade to something new.
Tax Advantages: You may be able to deduct monthly lease payments off-balance sheet as an operating expense or capitalize them and take the depreciation, depending on the type of lease.
Improved Balance Sheet Ratios: Unlike traditional methods of financing, many operating lease obligations are not capitalized, which can improve balance sheet ratios.
Preserves Existing Bank Lines: You can keep your bank lines or bank exposure open for other, non-equipment items that might come up.