Grow your Business with Equipment Leasing
Grow your Business with Equipment Leasing
1. Leasing Conserves Credit Lines – Because money is not borrowed when you lease, your existing credit lines are not affected and are still available for your company’s growth.
2. Conservation of Capital – Purchase assets that appreciate in value, but lease the items that depreciate. Leasing provides an alternate source of financing that is suited to depreciating assets. Don’t invest in depreciation. Bank lines are perfect for keeping on top of the day-to-day operations of a business. Long term equipment acquisitions are a different matter.
3. Tax Benefits - Lease payments are made from before tax earnings, rather than with after-tax earnings. Depending on the structure of the lease, 100% of the lease payments may be fully deductible.
4. User Friendly –100% financing, including installation and software. The documentation is more flexible and simpler.
5. Lease Payments That Do Not Change –The lessee can more accurately predict equipment costs and cash needs, because there are no variable interest rates, thereby keeping the lease payments fixed.
6. Asset Management– Leasing and Asset Management are connected, as leasing can be implemented as asset management outsourcing. The process of buying, maintaining and disposing of equipment can distract valuable IT resources from more important tasks.
7. Solution to Budget Limitations – Leasing can enable budget allotments to stretch in order to acquire the quality and quantity of what you really want, instead of accepting a lesser piece of equipment that just meets requirements, but doesn’t leave much room for growth.
8. Avoid Obsolescence – The lease term can be synchronized with an equipment’s productive life. At the end of the lease, outdated equipment is replaced by the newer, more modern equipment that takes you to the next level. Purchased equipment is normally kept far beyond its useful life. Often outdated equipment is moved downstream, or stored until it is worthless.
9. Flexible Payment Plans – If your business has predictable cash flow cycles, such as seasonal business, etc., you can arrange the payments for when you normally receive payments for your products or services. Pay for the new equipment when it can pay for itself. Leasing has flexible, customized lease paying schedules.
10. Competitive Advantage – A Vendor Program can be set up, at no cost to you, that supply’s you with another sales tool when other businesses are interested in your products. Offering your customers leasing as a financing option can help grow your business.
Lease versus Purchase - Information you may want to consider
The decision to lease or purchase is based on a variety of considerations including cash flow, monthly expenses vs. fixed capital outlay, budget considerations, obsolescence, etc.
Lease vs Purchase
Cash Outlay
Cash: 100% of cost
Loan: Often a 25% Down Payment
Lease: 100% Financing
Affect on Credit Facilities
Cash: Impacts Balance sheet
Loan: Decreases credit available
Lease: Credit unaffected, $0 borrowed
Affect on Operating Capital
Cash: High front-end cost
Loan: Down Payment required
Lease: Low front-end cost
Affect on Payments
Cash: 100% COD or 30-60 day terms
Loan: Variable interest rates affect payment amount
Lease: Fixed payments, potential tax benefits
Scheduling of Payments to Match Cash Flow
Cash: No
Loan: No
Lease: Yes
Easily Upgrading or Adding Additional Equipment, etc.
Cash: No
Loan: Re-application to funder for new loan or add to existing loan is often required
Lease: Yes
Approval Process
Step One - Provide Credit Information
Complete a credit application and submit it to a leasing consultant. If additional information is required you will be contacted by the leasing consultant who will put your credit package together for presentation to one of our many Funders.
Step Two - Approval
The application will processed quickly and you will be informed ASAP. Approvals vary with the size of the lease and ability of the customer to provide any additional information requested. Once all of the customer information has been received it normally will take one day to render a decision; smaller leases, usually within the same day.
Step Three - Lease Execution
The lease documents will be e-mailed, faxed or couriered for the customer’s signature. A P.O. will be issued upon receipt of an executable lease package. The order is placed or released to you and the supplier is paid within hours.
For more information on Equipment Leasing or other Business Financing options contact:
Ray Ellis, BFC
AAray Financial Group
Phone: 905-877-9718
Email: busifinan@aarayfg.ca
This is the third of a series of articles that will explain in more detail the different types of Business Finance Options that are available. I hope that you found it informative and will read the remaining articles in the series as they become available.
Grow your Business with Equipment Leasing - To learn more about this author, visit Ray Ellis's Website.
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Ten Reasons Why Businesses Lease
1. Leasing Conserves Credit Lines – Because money is not borrowed when you lease, your existing credit lines are not affected and are still available for your company’s growth.
2. Conservation of Capital – Purchase assets that appreciate in value, but lease the items that depreciate. Leasing provides an alternate source of financing that is suited to depreciating assets. Don’t invest in depreciation. Bank lines are perfect for keeping on top of the day-to-day operations of a business. Long term equipment acquisitions are a different matter.
3. Tax Benefits - Lease payments are made from before tax earnings, rather than with after-tax earnings. Depending on the structure of the lease, 100% of the lease payments may be fully deductible.
4. User Friendly –100% financing, including installation and software. The documentation is more flexible and simpler.
5. Lease Payments That Do Not Change –The lessee can more accurately predict equipment costs and cash needs, because there are no variable interest rates, thereby keeping the lease payments fixed.
6. Asset Management– Leasing and Asset Management are connected, as leasing can be implemented as asset management outsourcing. The process of buying, maintaining and disposing of equipment can distract valuable IT resources from more important tasks.
7. Solution to Budget Limitations – Leasing can enable budget allotments to stretch in order to acquire the quality and quantity of what you really want, instead of accepting a lesser piece of equipment that just meets requirements, but doesn’t leave much room for growth.
8. Avoid Obsolescence – The lease term can be synchronized with an equipment’s productive life. At the end of the lease, outdated equipment is replaced by the newer, more modern equipment that takes you to the next level. Purchased equipment is normally kept far beyond its useful life. Often outdated equipment is moved downstream, or stored until it is worthless.
9. Flexible Payment Plans – If your business has predictable cash flow cycles, such as seasonal business, etc., you can arrange the payments for when you normally receive payments for your products or services. Pay for the new equipment when it can pay for itself. Leasing has flexible, customized lease paying schedules.
10. Competitive Advantage – A Vendor Program can be set up, at no cost to you, that supply’s you with another sales tool when other businesses are interested in your products. Offering your customers leasing as a financing option can help grow your business.
Lease versus Purchase - Information you may want to consider
The decision to lease or purchase is based on a variety of considerations including cash flow, monthly expenses vs. fixed capital outlay, budget considerations, obsolescence, etc.
Lease vs Purchase
Cash Outlay
Cash: 100% of cost
Loan: Often a 25% Down Payment
Lease: 100% Financing
Affect on Credit Facilities
Cash: Impacts Balance sheet
Loan: Decreases credit available
Lease: Credit unaffected, $0 borrowed
Affect on Operating Capital
Cash: High front-end cost
Loan: Down Payment required
Lease: Low front-end cost
Affect on Payments
Cash: 100% COD or 30-60 day terms
Loan: Variable interest rates affect payment amount
Lease: Fixed payments, potential tax benefits
Scheduling of Payments to Match Cash Flow
Cash: No
Loan: No
Lease: Yes
Easily Upgrading or Adding Additional Equipment, etc.
Cash: No
Loan: Re-application to funder for new loan or add to existing loan is often required
Lease: Yes
Approval Process
Step One - Provide Credit Information
Complete a credit application and submit it to a leasing consultant. If additional information is required you will be contacted by the leasing consultant who will put your credit package together for presentation to one of our many Funders.
Step Two - Approval
The application will processed quickly and you will be informed ASAP. Approvals vary with the size of the lease and ability of the customer to provide any additional information requested. Once all of the customer information has been received it normally will take one day to render a decision; smaller leases, usually within the same day.
Step Three - Lease Execution
The lease documents will be e-mailed, faxed or couriered for the customer’s signature. A P.O. will be issued upon receipt of an executable lease package. The order is placed or released to you and the supplier is paid within hours.
For more information on Equipment Leasing or other Business Financing options contact:
Ray Ellis, BFC
AAray Financial Group
Phone: 905-877-9718
Email: busifinan@aarayfg.ca
This is the third of a series of articles that will explain in more detail the different types of Business Finance Options that are available. I hope that you found it informative and will read the remaining articles in the series as they become available.
Grow your Business with Equipment Leasing - To learn more about this author, visit Ray Ellis's Website.
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