Benefits of leasing your equipment not buying it

Every type of business such as corporations, the government, partnerships and non-profit organizations have leased at least one of their pieces of equipment at one time or another and nearly most of them say they would choose to lease again. Depending on the lease structure, at the end of the lease term the company can either decide to buy, return or continue to lease the equipment. In some cases, leasing equipment instead of buying it can be an excellent choice for your business. However, some may not be aware of the benefits of leasing equipment, nor of the hidden costs involved with leasing, including use restrictions and legal implications.

Before you decide to lease equipment for your business, consider having a lawyer look over the lease before signing papers to avoid any misunderstandings and possible legal ramifications. Technology is always changing, systems are constantly improving and most equipment needs to be updated or replaced every few years. Therefore, for equipment that needs to be replaced every so often, leasing is certainly your best option. Leasing offers flexibility to companies that have different needs or cash flow patterns. A healthy company may simply want to avoid buying equipment that may become obsolete a few years later. As for a start-up company, it may not have the option of buying the equipment due to its limited funds and therefore choose to lease them instead.

Moreover, one of the main benefits to leasing is that it allows businesses to upgrade or improve their equipment without coming up with a considerable amount of money as a down payment. Leasing eliminates the burden of borrowing money every time you need to make upgrades or changes on a regular basis. By freeing up the substantial up-front investment to buy equipment, businesses can use that capital and invest it somewhere else. Leasing helps companies to stay competitive. Once the lease is over, the equipment can be returned or replaced for new equipment. There are a lot of choices of equipment from production equipment to office equipment that are available for you to lease depending on your business needs. With a lease, you have a set monthly payment which can help you budget more effectively.

Many small businesses struggle with cash flow, and leasing equipment rarely requires a down payment, and thus leasing helps business owners to avoid expending their much needed working capital. As your business grows and your needs change, leasing allows you to customize a plan to focus on your needs and requirements including installation, maintenance and many other services. When leasing, you pay only for the time that you are using the equipment rather than the whole cost of the equipment. The best advantage of leasing is the ability to return or exchange equipment to the leasing company at the end of the lease term. You never have to buy new equipment to keep up with the latest equipment in order to remain competitive. Disposing of your old equipment can be easy by simply opting to lease.

Understanding the main objective of leasing equipment can enhance your financial performance and capital productivity. The successful implementation of good business management and recycled assets through a mix of owned, leased and rented equipment has the potential to considerably impact the return and profitability of your equipment investment.
Moreover, one of the great benefits of leasing your equipment instead of buying is that leasing allows you to not show the equipment on your balance sheet since the equipment is being rented.
If you consider selling your business in a few years, this may make your company more attractive to potential buyers since the balance sheet shows less debt.