Equipment leasing is a popular method of equipment financing because it is not only cost-effective but it offers excellent management and financial control. Here are four main advantages of leasing equipment to your company. Control and Reserve Cash. Equipment leasing efficiently and effectively manages and saves your working capital (money).
Capital Gains. Equipment leasing enables you to save your working capital for future business growth, expenses, or unplanned business-related expenses. This gives you financial flexibility. With effective management, you can plan and invest your working capital in the right venture.
For example, you can give orders to your production staff to increase production at a faster rate and hire additional laborers. The capital saved by leasing equipment can be used for purchasing new machinery or equipment.
Marketability. Another advantage of equipment leasing is its marketability. This section discusses how you can take advantage of your equipment leasing contract.
You can obtain equipment financing by comparing your equipment lease quotes with similar equipment available through other vendors and resellers. A successful deal comes when you negotiate with the seller to provide you with attractive financing terms and conditions that meet your company’s objectives.
Cash Flow. When you acquire equipment leasing, your cash flow increases immediately. Leasing is a low-risk form of capital investment. Also, because the lease payments are fixed, you can use this cash flow to buy additional equipment if your company expands. This cash flow advantage of equipment leasing also makes leasing an attractive option for companies involved in commodity markets where demand for finished goods is high and supply is low.
Flexibility. In addition to these benefits listed above, equipment leasing companies offer a wide range of flexible leasing options, such as term loans, construction loans, and non-recourse financing options. These flexible options make leasing companies a preferred choice for many business owners. They also allow the small-business owner to make better use of his capital resources by reducing his financial risks.
These advantages make equipment leasing an attractive option for many business owners. However, equipment leasing companies charge a fee for their services. The costs associated with equipment leasing vary depending on the size, equipment age, capacity, and several units to be leased.
Equipment leasing companies typically require up-front fees from the small business owner to cover expenses and administrative fees. You can learn more about capitalizing on business financing options such as equipment leases by registering for a free Small Business Financial Guidebook.