The Equipment Leasing Process and its Benefits over Purchasing
Some businesses rightfully know that equipment leasing is the right choice for their operational and financial process. However, they don’t know how to get started. The process is simple though.
To get started, you need to understand three fundamental concepts regarding your equipment leasing requirement.
- Your Monthly Budget – Leasing the equipment, instead of purchasing them, provides a host of benefits to the company, at a very nominal cost. Leasing offers substantially lower payments, which can be done monthly, which doesn’t put a dent in your balance sheet.
- The time-frame for Holding the Lease – If you need to lease equipment for a short period of time, the concept is very cost-effective. If you are using equipment for more than three years, we believe a loan or standard line of credit is more beneficial.
- Depreciation of Equipment – For some industries, the problem is the quick outdating of technology. Make sure you understand how quickly that happens in your industry before buying or leasing.
Moreover, if you are planning to purchase equipment, you must know its drawbacks against leasing. The biggest drawback is obsolescence. Most companies are stuck with old and outdated equipment, even after they have been depreciated and there is nothing they can do to take them off their balance sheet. This not only hinders the productivity of the organization but creates a wrong impression in the balance sheet regarding the ownership of assets. While some assets may not be of quality or capable of taking any further workload, they stand in the balance sheet, to show off the asset of the company, promoting a huge list of depreciated assets in front of stake-owners.
Another thing to keep in mind is the maintenance cost of ownership. Once purchased, companies have to keep the equipment secured through insurance, warranties, and claims. They have to maintain them regularly and keep them running. This isn’t a problem with leasing. You simply have to use them, without worrying about the problems. The lessor takes care of everything, and if something doesn’t work as it should, the lessor company will take care of replacement.
Contact us today, if you would like to receive a quote from us, and take care of your equipment requirements, so that you can focus on what matters, while we take care of what’s necessary.