You’ve heard the old adage – you have to spend money to make money. Equipment leasing turns that around with financing that can save money and provide more flexibility while keeping business on the cutting edge.
Perhaps your older computer equipment needs to be replaced with faster laptops and more networking equipment. Maybe you’re looking to expand, but can’t afford to purchase new equipment. Perhaps your industry changes rapidly, making your current equipment obsolete every few years. Equipment leasing offers alternatives to navigating those business pitfalls.
Why Equipment Leasing can be more beneficial than Purchasing
Even if a business has the luxury of extra cash reserves, these equipment leasing benefits should be considered before writing a big check.
Most businesses don’t have extra cash reserves. If they do, there are plenty of other ways to use it, like hiring new employees, stocking more inventory or expanding a facility. Avoid the sinkhole of obsolescence – why spend $1 million in cash for technology that will change in two years? At the end of a lease, you can return the equipment and get something more advanced, or buy the equipment if you choose.
A purchase commits a business to one particular technology or business strategy. This is especially relevant for purchases that involve core business offerings. A business might be able to live with aging printers or copiers, but if you’re a healthcare company that invested in machines for therapy protocols that are no longer in demand, your business could be at stake. Leasing that technology lets you adapt as your industry evolves.
Reduce Your Tax Liability
If a lease is structured correctly, a business may be able to expense 100 percent of the payment. On a conventional loan, only interest is deductible. Consider financing options but a lease might bring tax advantages.
Shift a Capital Expense to an Operating Expense
As the year progresses, many businesses find their capital budgets bursting at the seams. Needs and opportunities arise with little regard for those seams. Leasing offers a way to obtain the equipment needed without blowing up the budget.
Some investments—like complex technology implementations—involve unpredictable costs. A lease provides fixed, predictable monthly payments that are spread out over time. This means fewer surprises and better cash flow overall.