|
|
The Pros And Cons Of Equipment Leasing
To achieve its investment, the company seeks a balance between cash and credit medium or long term. It can also choose to lease. Equipment leasing is very flexible in its use and constitutes a financing measure when in synergy with other sources of funding.
Some of the benefits of equipment leasing are:
If the operations of your company involve the use of machinery and though you have high returns you are not able to obtain a loan, equipment leasing is for you. These companies will be more flexible when it comes to approving requests, more so than banks. In general, most case get approved.
Another advantage of equipment leasing is the fact that its payment is tax deductible. Additionally it will not alter the relationship between debt and cash flow because it is included as an expense and not the same way a loan would be.
Equipment leasing is also beneficial for companies that use technology that changes year after year, like the ones working in technology or health. Equipment leasing makes it possible to have high tech equipment without having to go through purchasing processes every year.
Equipment leasing companies are the ones that own the equipment. They make business out of lending it to people in exchange of a fee. The equipment is easier to get and in the requests are processed more efficiently than in banks.
Some of the disadvantages of equipment leasing are:
The main drawback is the fact that it is more expensive than buying the equipment through a loan. However it is a choice for those who cannot afford a loan. Refinancing is also more costly and the customer will pay a higher price because of the leasing fees.
The tax administration requires the leasing contracts a period very close to that of depreciation of equipment financed. This is to prevent the company tenant the excessive practice of accelerated depreciation agreeing to contracts that are too short.
Depreciation does not apply when you are leasing equipment because it is not an asset that you have purchased. Another drawback of this is the fact that you would be able to get tax savings on depreciation.
Back leasing is another feasible option. You can reduce the effect of some of the mentioned drawbacks of equipment leasing when leasing some of your own equipment to a company that is in need of funds.
About the Author Wade Henderson - recognized Professional - 15 yrs in the Business Finance Field - strong reputation for getting the deal done. IMMFinancial.com IMM Factoring IMM Export Finance
|
 |
Please Rate: |
|
Rating: |
 Processing ... |
(Average: Not rated) |
| Views: | 16 | |
|
| More Articles from Management | | |
| Top Articles in Management | | |
|
