When you need new equipment there are generally TWO ways to acquire it: spend your own cash or borrow someone else’s. If you borrow, there are several options – arrange an overdraft or loan from a bank, or lease directly from a leasing company.
Should I pay cash?
It makes little sense to sink hard-earned cash into equipment that will ultimately depreciate – and sometimes very quickly. Leasing allows you to have your cake and eat it, giving all the benefits of new technology while holding on to your cash for other uses.
Should I go to the bank?
Your bank may be a slightly cheaper option BUT loans and overdrafts are usually secured by charges over your company assets or with your personal guarantees. Seeking to extend your borrowing through your bank may result in a full review of your facilities. If you have a sensible alternative to the bank you should use it – leaving any additional bank borrowing in reserve.
Leasing – the ideal solution!
Leasing is a quick and simple way of getting hold of the equipment you need while leaving your cash untouched and your banking lines ready for unexpected calls on cash flow. Once you’ve spent your cash or used your bank facilities on equipment you run the risk of exposing your business to a lack of working capital – and wishing you had used leasing instead.
How the benefits stack up . . .
- Your rental is fixed for the term of the agreement – no matter what happens with bank rates your rental stays the same. As other costs increase around you, your lease rental will not.
- Leasing is flexible. We try to match the term of your lease to the useful life of the equipment, but sometimes technology advances so fast that you’ll want to update sooner. No problem. Through an upgrade programme we can supersede your lease with a new one for the latest equipment.
- Tax allowable. Leasing is an operating expense and the full rental you pay can be offset against tax. Your accountant will be able to advise to what degree your business will benefit.
- No deposit. You only start paying rentals after your equipment has been delivered.