As your business grows and expands many decisions regarding costs, operations and upgrades must be made. One of the best decisions the owner of a company can make is leasing manufacturing equipment instead of purchasing. What are the benefits and why should you consider leasing equipment for your business?
One of the main benefits of leasing tools and hardware is the flexibility, particularly as equipment becomes obsolete. Technology is ever changing and can have a drastic impact on a business. When this rapidly changing and improving technology affects office equipment, computers and copiers the benefit of leasing is clearly seen. Instead of having to absorb the cost of replacing these items every few years, or having your company risk using less than optimum equipment, businesses that lease can upgrade easier. When the lease agreement is complete many leasing companies will give businesses the option to lease again, but with the latest and best equipment.
There are also significant financial benefits to leasing manufacturing equipment. With leasing, although you must make a monthly payment the payment is typically fixed and regular. Factoring in a regular payment will make budgeting and financial projections easier for your business. As opposed to having to consider the exorbitant upfront costs that can come with buying equipment outright. There is also the issue of depreciation. When you purchase equipment the cost can be used as a deduction during tax time, however the amount is based on the depreciated value of the item. But with leasing equipment the rental payments can be written off as a business expenses, without taking into consideration the value of the equipment at all.
Leases are also relatively easy to obtain. For businesses with very little or poor credit history the idea of purchasing equipment may seem farfetched because of the difficulties involved in acquiring a loan. However, often regardless of credit history, a business may enter into a lease agreement. The lease agreement may also be made more comfortable for businesses by lengthening the term and thereby lowering the monthly payment obligation.
If your business is in need of new equipment, you should consider leasing manufacturing equipment instead of buying. Completely weigh the benefits and drawbacks of both options before making a final decision. Depending on your situation and needs, the advantages may well outweigh the disadvantages, allowing you to get the tools you need to continue to grow your business without adversely affecting your revenue and monthly cash flow too significantly.