- Buy what appreciates. Lease what depreciates.
- Use tomorrow’s profits (not yesterday’s profits), for tomorrow’s production.
- Use the equipment you require now, instead of later.
- It is the use of the equipment and not it’s immediate ownership that is important.
- Amortization should equate more closely to the useful life of the equipment.
Accounting and budgeting are easier:
The lease can be structured exactly to match cash flow needs. Accounting (no more complicated C.C.A. Schedules) and budgeting (estimating is eliminated) is simplified.
Tax advantages keep costs down:
All Businesses look for ways to minimize their tax burden. In most cases, the write-offs can be accelerated because the lease payments are 100% tax deductible.
Easy equipment upgrades avoid obsolescence:
Planning ahead for equipment upgrades? Leasing is the only form of financing that gives you the necessary flexibility. Operating with “State of the Art” equipment may be important in maximizing productivity and competitiveness.
Hard earned cash is better invested into appreciable assets:
Some assets; computers and buildings for example, have very different useful life expectancies and future marketable values; therefore, optimum capital return and cash flow preservation will be achieved by leasing your equipment and purchasing appreciable assets.
Existing credit lines and cash are preserved for other priorities:
Leasing the equipment preserves bank credit lines for other working capital needs such as day-to-day expenses and miscellaneous reserves.
What happens at the end of the lease?
- Purchase the equipment at expiry for FMV (in most cases, as little as 10% of the cost or even $10.00)
- Upgrade the equipment using the equity from the old equipment to structure a new lease.
- Return the old equipment.