5 Rewards Your Business can Reap from an Equipment Lease

by Irish Taylor Business Consultant

Here are benefits your business will surely enjoy, should you decide to lease manufacturing equipment, office furniture and fixtures, as well as tools and special devices:

Less business expenses and costs. Did you know that apart from freeing up funds for urgent business expenses, a true lease can also help you save a great deal of cash on the costs associated with owning and maintaining equipment? After all, you won’t have to set aside funds to cover expenses involved with depreciation and obsolescence. In fact, you won’t even have to incur huge costs on repair and maintenance works. That’s because the equipment manufacturer or supplier will shoulder them, on your enterprise.

Still, you should remember that your enterprise is partly responsible for the upkeep of the machines, furniture and fixtures, tool and devices, and vehicles you use. That way, you can avoid incurring penalties and fines for equipment damages, especially when the term of your lease ends.

Tax benefits associated with leasing business or office equipment. Leasing business equipment can also afford your enterprise tax benefits. Always remember that the monthly “rental” charge you pay the leasing firm can be deducted from your business income taxes. This means that the cash you will save from such charges can then be used for other important expenses, much more so for your business contingency or savings fund.

100% financing. Unlike other equipment financing options, a true lease does not require down-payment. In fact, your shop or store will only be required to submit payment after using the items you’ve requested for at least one month.

It is also worth mentioning that you can actually arrange for special payment options, most especially during business startup or when business is slow. For instance, with a step-up lease, you can defer payment for the first few months or until your business generates its first profit. By then, your enterprise will be required to make bigger payments to cover the charges it wasn’t able to settle on the first months of its commercial operations.

Meanwhile, in a skip-lease plan, your business can skip or miss out on its payments, especially during lean season. What’s good about this arrangement is that you can defer payments, without incurring penalty charges.

So, as early as now, you should choose a payment option that will work to the advantage of your enterprise.

A fully-optimized working capital. We all know for a fact that purchasing machines and special tools or devices can actually eat up a significant percentage of your working capital. But, that’s not the case when leasing business equipment. That’s because you will only use a small sum of cash to cover your rental charges. Hence, you can maximize the use of your working capital, most especially for covering your startup expenses.

Possibility of maintaining a solid business credit profile. In most instances, business owners would rely on their business credit cards to purchase expensive equipment. However, such decision often backfires on them as their huge purchases and bills make them spend beyond their credit limits. And this in turn compromises the good credit standing of their respective enterprises.

Such problems can be easily avoided if you will only arrange for a lease with an equipment manufacturer or supplier, nearby. After all, with such arrangement, you can have the assurance of using your business credit card exclusively for the small costs, bills and expenses that will be incurred by your enterprise. Hence, you can surely succeed in building as well as in maintaining a solid credit profile, in behalf of your commercial establishment.