Thursday, May 13, 2021

8 Reasons to Lease Capital Equipment

Honeycomb Core & Composite Panel Machinery Manufactured by Dependable System Engineering.

Business capital equipment leasing allows a company to better match its cash outflow with revenue production through the use of equipment. The process conserves valuable working capital & bank lines while being efficient, convenient & allowing for 100% financing. In general, if equipment appreciates, buy it.  If it depreciates or becomes obsolete, lease it.

Reasons to lease capital equipment include:

  1. Purchasing Power:  The process allows the company to acquire more &/or higher productive equipment.
  2. Balance Sheet Management:  The lease conserves operating capital & frees working capital & bank credit lines for inventory, expansion & emergencies. The lease preserves the company's cash flow & when properly structured, the lease is not considered an asset.
  3. 100% Financing:  Equipment leasing requires no down payment & the term of the lease can be matched with the useful life of the equipment.
  4. Asset Management:  Equipment leasing provides the use of the equipment for specific periods of time with fixed payments & assumes & manages the risk of equipment ownership.
  5. Service Additions:  Leases can be constructed to include installation, maintenance & other services, if needed.
  6. Tax Treatment:  Leasing offers the option of deducting 100% of the lease payment as an expense.  At the end of the lease, the equipment can be purchased for $1, & the equipment is already depreciated. During the first part of the lease while the equipment is being manufactured, the lease payments normally are only the interest. (See Section 179 of the US tax code)
  7. Upgrading Technology:  Leasing provides companies with the ability to keep pace with new & more effective technologies in their industry. This allows more productive manufacturing & increasing business development.
  8. Proven Financing Option:  80% of companies in the US use leasing for their equipment needs & over 40% of all capital equipment is leased.

With our banking contacts, Dependable System Engineering can refer you to start the process. Please call us at 941.351.6330 for additional help.