An overwhelming majority of businesses in the U.S. either lease or finance equipment used in their business operations. There are a number of reasons why businesses have turned to leasing in such numbers, and the most prominent of these reasons are described below.
When you don’t have to use your cash for a huge down payment on major pieces of equipment, that cash can be used to fuel business growth, research and development, marketing and advertising, or business improvements.
External asset management
One of the appealing aspects of leasing your heavy equipment is that you don’t have to manage it, because you don’t own it. The leasing company retains responsibility for all maintenance and repairs.
Since you don’t have to make a large lump sum payment at the outset, and instead are making smaller incremental payments, you can enjoy a favorable return on investment because your equipment is generating revenues for you.
By locking in rates at lease time, you can avoid the possibility of inflation at a later date, so this provides you with a good hedge against future economic stresses.
When you’re leasing your equipment, it’s generally for a short enough period of time that you can keep leasing new equipment. When your short term lease runs out, you can lease a newer version of the same piece of equipment.
You can usually achieve advantageous bundling by combining the equipment, installation, and maintenance into one manageable solution which works well for your business.
Favorable financing terms
It’s fairly easy to find a leasing company which will offer you 100% financing for your equipment, as well as any software or services which are necessary. Quite often, you can arrange for all this with absolutely no down payment as well.
It’s very often possible to establish favorable payment terms which can be aligned with your cash flow, and sometimes even with your seasonal revenues.