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Equipment Leasing Canada - Why is Leasing Equipment a Solid Financing Alternative for Canadian Business Owners?

Guest post by: Stan Prokop

Article Overview: The article explores the continued growth and popularity of leasing in Canada with the primary example of computer ' it' leasing as a good example of the growth and reasons behind this type of financing decision .

Equipment Leasing Canada - Why is Leasing Equipment a Solid Financing Alternative for Canadian Business Owners?

Leasing Equipment in Canada continues to be a major source of Business financing for Canadian business owners and financial manager. Many hundreds of millions of dollars was invested during the past year in plant equipment, computers, software, and other capital assets purchased by Canadian firms who are optimistic about the future.

The average Canadian cannot probably fully appreciate the breadth of assets that are financing by leasing companies in Canada. From aircraft, to computers, to office equipment, to mining and plan machinery, if it was a revenue producing asset Chief Financial Officers, business owners, and operations mangers all probably considered lease financing as an alternative to purchasing the asset outright.

There are many accounting and financial aspects to lease financing in Canada. Capital leases , which are leases presuming your firms ownership of the asset are recorded on balance sheets, operating leases are buried deep in the footnotes of your firms financials - in those cases you are using the asset with , generally speaking, no intent of owning the asset. With changes forthcoming in world wide accounting treatment of leases more and more firms seem to be opting for capital lease transactions.

One of the major beneficiaries of lease financing is IT leasing, aka computer leasing .As the Canadian economy continues to slowly improve after a somewhat disastrous 2008 and 2009 more and more firms are upgrading computers and technology . It is not surprising that in one of the fastest areas of 'asset aging ', i.e. computers that more and more firms wish to upgrade assets.

When we start to consider the huge amount of capital expenditure that is involved in purchasing computers it makes perfect sense that business owners, ' IT ' managers, and chief financial officers reflect on lease financing as a solid solution for this asset class. Although computer and other related technologies (i.e. telecom) continue to drop in price and provide more performance at the same time the current low rate environment, in addition to cash flow savings, make lease financing a strong business financing choice. As we have said many times in the past, as a general rule you want to use a computer, not own one.

In many cases it is the manufacturers themselves that provide major incentives for the customer to finance technology via the equipment lease. This makes sense of course given they retain a certain amount of account control and influence on future purchases and upgrades.

Naturally prudent business owners and financial mangers will want to ensure they clearly understand the lease rates, their ability to purchase, upgrade or return the equipment, as well as having a solid knowledge of any hidden fees with respect to maintenance, returns at end of lease, etc.

Canadian business owners who place a strong importance on understanding all their financing options with respect to asset financing and leasing should ensure that they retain the services of a trusted an experience lease advisor who can ensure they will receive optimal rate, terms, and structures in their asset financing needs .

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Article Tags: business IT Leasing, equipment leasing ontario, leasing equipment



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