Leasing or Buying as a Business

Sometimes, businesses lack sufficient cash for essential capital items,likeequipment, furniture, and machinery, particularly during periods of rapid growth. There are a number of options available to businesses in this situation, and one of the best and most commonly used options is leasing. Commercial leases such as a commercial hire purchase or a finance lease enables businesses to make use of new equipment without full ownership or commitment. Best of all, there is no need for the business to make a large cash outlay to purchase the equipment.

Supporting Business Expansion

Businesses that are expanding quickly can experience cash flow constraints. This affects the amount of working capital available for the business. Without sufficient working capital, businesses can find it hard to conduct day-to-day operations. Purchasing of inventory, paying suppliers, and investing in vital capital items can all be challenging without sufficient cash flow.

Numerous businesses lease equipment and furniture, rather than making outright purchases. Some types of hire agreements allow businesses to take ownership at the end of the leasing period or during the lease period. Paying manageable instalments ? much like the way mortgage payments are made for housing loans ? rather than a large initial outlay givesbusinesses the opportunity to conserve their cash flow. Thus, they can make use of more equipment than their cash supply would otherwise allow.

Convenience and Flexibility

Businesses may choose to lease over buying equipment because of the convenience and flexibility associated with hire agreements, as discussed below:

• No ownership commitment ? There is no ownership commitment, which means the finance company will take care of the equipment at the end of the lease. The business does not need to worry about disposal or reselling the equipment to someone else when the business wants to upgrade the equipment.
• Easy to upgrade ? No ownership commitment enables businesses to upgrade equipment relatively more easily. This is an important benefit, particularly in industries where equipment quickly becomes obsolete.
• Extra features ? Some hire agreements may incorporate optional features, such as repairs, servicing and maintenance. This can save businesses considerable time and money if the equipment breaks down.
• Option to purchase ? Some agreements offer the option to purchase the equipment at the end of the lease.

Minimise Risk

Buying equipment can be a significantcommitment, both in terms of time and cash, especially if you are making a large outlay. Businesses that make a large outlay for equipment may be faced with the prospect of finding it uneconomical to upgrade when new technologies become available. This can affect staff productivity and market competitiveness.

Leasing comes with less risk. Businesses can typically contract to hire equipment for several years or more; after that initial period, theymay choose to update their equipment through another lease. There is no major financial commitment at the outset, and so there is less business risk exposure for the organisation. Businesses do not have to concern themselves with disposal of obsolete equipment, as the financing company takes care of this.

Other Reasons Businesses Choose Leasing

In addition to facilitating business growth, convenience, and risk management, leasing can providea number of extra benefits. For example, the lease payments may be partially or wholly tax-deductible.

Finance companies that offer leasing packages often provide customised agreements. This means businesses can specify features, such as shorter or longer agreement periods, or payment frequency, to allow a better fit with their business requirements. Lease agreements are also relatively easy to apply for, without the sometimes onerous requirements associated with other types of loans and financing.

Source: http://www.urbancartography.com/leasing-buying-business/

mr rogers jamie lee curtis spring equinox audacious pollen count mexico city first day of spring