New Equipment is a requirement to grow your business, improve productivity and realize operational cost efficiencies. Equipment Leasing might be the best solution to meet your business needs.
A recent Gallup survey found that 80% of U.S. businesses lease a portion of their equipment. The list of companies using leasing ranges from the Fortune 500 to mom and pop shops. Consequently leasing is one of the fastest-growing ways of financing equipment in business today.
Managing cash flow is a challenge for businesses of all sizes especially when you need to add equipment. Leasing can put that equipment to work for you without a major capital investment and with real cash-flow advantages. Here are the key benefits for leasing equipment:
Leasing gives you use of equipment without having to wait to pull the full cost of the equipment together and often requires lower payment than other methods of financing. Best of all, you can often afford higher quality equipment that is more cost effective to operate.
Where other types of financing require a hefty down payment, leasing is 100% financing. Most lease agreements require an advance of only one or two month's payment plus a security deposit. Leasing puts the equipment to work for you immediately, at a minimal up-front cost.
Lease payments have no impact on your credit lines with your bank. Your borrowing power is preserved for other business opportunities.
The latest and best equipment lets you do the job faster, more efficiently and cheaper than the competition. Leasing gives you the advantage of the latest available technology at a more affordable cost.
"The newest innovation" doesn't stay new. Leasing gives you today's best technology and then lets you upgrade when the equipment has outlived its advantage. You can eliminate the hassle of selling equipment at a depreciated value.
Leasing gives you more than just the equipment. It also can cover the cost of delivery and installation. Your lease includes everything it takes to actually put the equipment to work for you.
Purchases are made with after-tax dollars. Your lease payments are usually considered a pre-tax business expense and as such may reduce your taxes.
Lease payments are little more than a line-item in your monthly cost of operations - a minimal bookkeeping effort that frees you from time-consuming depreciation schedules.
Remember 1980, when interest rates skyrocketed from 9% to 21.5% in a single year? Unlike bank lines of credit, with variable rates, lease payments are fixed - no matter what happens to the market tomorrow.
A properly tailored lease program gives you the benefit of having the equipment you need without all the risk and financial pressures.
Equipment Leasing Benefits For Manufacturers and Dealers
As a manufacturer or dealer you know that leasing is an effective point-of-sale option for your business with a number of benefits including:
Accelerate the sales cycle by making the payment method available to the buyer quickly and painlessly.
End-of-lease disposition provides natural sales trigger points for selling insurance and service contract, cross-selling, and reselling next-generation equipment.
The most cost effective sale is to a current customer so leasing enables you to build an ongoing relationship with your customers and permission to dialog and stay in constant contact..
More affordable payments often means that a customer can upgrade to a higher quality more cost effective piece of equipment which is a big win-win for both you and the customer.
Some manufacturers and dealers self finance sales by creating a captive finance company or partnering with a finance company to provide a “white label” financing solution. But even if you do not use your own capital to finance equipment sales whether you use your own capital to finance sales all manufacturers and dealers should provide a leasing option to customers. It’s easy to find an eager Equipment Financing company to partner with or you can choose to partner with LeaseQ which brings you the broadest selection of equipment financing companies and the ability to quickly match your customers to the best companies based on dollar amount, equipment type and credit score.
Good to know – Expected Accounting Rule Changes For Leasing
The Financial Accounting Standards Board (FASB) and the International Standards Accounting Board (IASB) have proposed making changes to accounting rules regarding leasing beginning January 1, 2013 but due to strong negative reaction the changes the time table is being pushed back some estimate an effective date of 2015.