Leasing lets you invest in your business, not in the infrastructure to fund it. How does the cost of the lease match up with your internal rate of return?
Preserves Credit lines
Leasing is an additional source of funding, allowing you to keep existing credit lines available for your business needs, much like keeping a cash reserve.
Fixed monthly payments allow you to know exactly what expenditures are required for the duration of the lease.
Technology Obsolescence Hedge
One of the largest risks in owning equipment is that the equipment will become obsolete before it can be fully depreciated. This can result in a book loss upon the sale or disposition of the equipment. Leasing separates the benefits of using equipment from those of owning equipment and allows you to hedge the risk.
Leasing provides the flexibility to use the latest technology, which may be important for maintaining a competitive edge in your business.
Coterminous upgrades, lease restructures and equipment swaps are three options that allow you to easily match equipment capacity to the ever-changing needs of your business, both planned and unplanned. If equipment is owned, issues such as capital acquisition processes, market value versus book value, and access to secondary markets for disposal make it much more difficult to be responsive to a changing business climate.
Off Balance Sheet Financing
Certain leases may qualify as an operating lease, and you do not need not show the lease commitment nor the corresponding assets on you balance sheet. This can improve many of your company’s financial ratios.