Whether your business is small or large or new or established, you should be focused on reducing costs and increasing revenues. However, every business requires equipment to function, whether they need simple computer systems or large, complicated machinery. However, leasing your equipment may be a cost-effective solution for acquiring the machinery you need. These are reasons you should consider equipment leasing.
No Replacement Costs
Technology seems to grow and expand at the speed of light. You have probably heard someone say that the moment a computer hits the retail shelves it is already obsolete. Unfortunately, this happens with many types of equipment. Eventually, manufacturers stop servicing old machinery or software, or you may not be able to find parts. In addition, these pieces are often much less efficient than newer tools.
When you lease your machinery, you don’t have to continuously purchase new, improved pieces. Instead, at the end of your lease term, you can upgrade to the newest technology and sign a new lease.
When you purchase equipment, you can either use your available cash, which can cause cash flow problems or prevent you from reinvesting into your company and using that cash to increase profits, or you have to finance the purchase. In either case, you deplete your available working capital because even loans require down payments.
With a lease, you don’t need a large down payment. In addition, your lease payments are typically lower than your loan payments would be. Your lease payments are also predictable, giving you better control over your budget because you don’t have to find ways to pay high upfront costs. You can also negotiate your lease payment terms. You can choose to pay monthly, quarterly or yearly if you choose.
Another way you save money is through lower taxes. When you lease equipment, your lease payments are immediately deductible as operating expenses. Purchased equipment is often deducted over time through depreciation expenses.
Today’s businesses need to be flexible and easily adapt to change. Leases are typically approved much quicker than loans as well, so you should receive your equipment within a few days or weeks rather than a few months. In addition, the lessor is typically responsible for machinery maintenance and repair.
In addition, you don’t have to worry about selling old equipment so that you can purchase new machinery for your company. Your innovation process will be faster because you can quickly get what you need for new product lines or quicker processes.
If you need to purchase machinery for your business, consider researching the benefits of equipment leasing.