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Benefits to Leasing Equipment

Details you may not have thought of until now

By Erin Yogerst - November 13, 2015

Do you know how leasing equipment can benefit your business? This article points out all the advantages to leasing and factors you need to consider before signing an agreement. Some of these may be obvious but some of them you might not have considered before. 

BENEFITS:​
  • ​Keep current with changing technology. Software and technology in all industries are constantly being updated every year, sometimes more than once a year. By leasing your equipment, you'll be able to keep your company and employees functioning with the latest information.
  • Maintenance may be included in the lease. It is inevitable that equipment breaks and needs repairs. Sometimes maintenance is included in the lease agreement, which prevents you from finding someone to fix it and saves you money.
  • Preserves capital. Purchasing equipment in a lump sum ties up your credit lines, which can prevent you from purchasing other business needs. You will also save time and the hassle of extending your credit for other purchases.
  • You have time to evaluate if the equipment is meeting the needs and requirements you needs. If you are satisfied with the equipment and need it longer than the length of the lease, you now know its capabilities and can decide to purchase it.
  • If you decide not to purchase it after the lease is up, payments cease giving you extra cash in your pocket.
  • Your Balance Sheet will appear stronger. Leasing equipment won't show up as an asset or liability. It will show up as an operating expense on your income statements.
FACTORS TO CONSIDER:
  • Length of time. If you need the equipment for a considerable amount of time, see if there is a purchase option; part of your payments will go towards the purchase price.
  • Use of equipment. Knowing how the equipment will be used determines the type of lease and the terms.
  • Wear and tear charge. There will usually be a charge for excessive use of the equipment. Make it known amongst your employees to care for it like it was their own.
ASK FOR WHAT YOU NEED:
  • Flexible payment structure. If you have seasonal business, ask if there are seasonal payment plans to better work for you.
  • If you plan on keeping the equipment after the lease, ask for a cap on purchase price so you don't end up paying too much. "Fair Market Value not to exceed XX% of the cost of equipment."
An article by Chris Brown entitled "Hidden Benefits of Leasing Equipment" delves further into these aspects of equipment leasing.