Equipment Leasing & Financing Options: Creating Solutions that are Cost Effective and Cash-Flow Smart
“If a man needs a piece of equipment and does not buy it, he pays for that equipment just the same as if he owned it.”
We know cash flow is critical to your business.
Working with a company that can bring financing options to the table for your company allows you to get the equipment you need at an affordable monthly payment that doesn’t break the bank. Learn how to lease warehouse equipment with Outsource Equipment below.
THE ADVANTAGES OF LEASING
Leasing industrial handling equipment brings many advantages, and all directly involve the company’s cash flow: Leasing provides significant tax savings for your company, allows a company to get the right equipment by reducing the price factor, and makes projects possible that would otherwise be impossible.
Essentially, the advantage to industrial equipment leasing over buying is that there’s usually no large outlay of cash at the beginning of the lease as there is with an outright purchase.
Other significant advantages include:
Many business leases come with 100% financing terms, which means no money changes hands at the inception of the lease. Can you imagine what a boon to cash flow this can be? While not totally cash-free (because the lessee has to make the lease payments each month), the assumption is that the company will be making the payments from future cash flows – that is, from enhanced revenues that the company earns because of the lease.
Another advantage to leasing industrial handling equipment is working around obsolescence, which means the company anticipates frequently replacing the fixed asset. For example, many larger companies lease rather than purchase their materials handling system so they can stay current with technology.
Based on the relationship between the lessor and the lessee, a lease may be for either just a few months or the entire expected life of the asset. Let’s say an employee for whom the company leases a vehicle leaves the company. Predicated on the terms of the lease, the company doesn't have to worry about advertising the car for sale and trying to find a buyer (as it would with an owned vehicle) — the company just turns the car back in to the leasing company.
Based on many different variables, a company may be able to utilize lower-cost financing and other tax benefits associated with leasing. Separate from any tax benefit a company may gain, lease payments can reduce taxable income in a more appropriate manner than depreciation expense. Remember you treat operating leases like rentals by expensing the entire lease payment when you make it.
Operating leases provide off-the-books financing in which the company’s obligation to pay the lease, which is a liability, doesn't reflect on the balance sheet.
This can affect a financial statement user’s evaluation of how solvent the company is because the debt is not listed. Contact us today if you'd like to lease warehouse equipment!