Is equipment leasing the way to go?
Considering that the US is in an economic crisis is no recent news. Cost-cutting is the primary agenda for many companies.
Equipment leasing could be the answer to all your cash flow struggles, as it offers businesses the ability to maintain efficiency at a lower cost.
There are many reasons businesses choose to lease their equipment over other financing methods. One reason, in particular, is that it is easier on the budget. Another reason is that it allows you to spread out payments over a longer time so that it doesn’t immediately impact your cash flow.
Let’s take a look at what exactly equipment leasing entails, and how it can benefit your business.
What Is Equipment Leasing?
Equipment leasing is the renting of equipment through a lease agreement. It is a form of financing that allows a business to obtain equipment for its operations without paying for it all at once.
The equipment leasing industry has a value of over $1 trillion. This industry provides businesses access to an extensive range of products and services, including technology, transportation, and office supplies.
When you own/run a business but struggle to upgrade your equipment/technology because you don’t have the necessary capital to pay for it upfront, this is where equipment leasing comes in handy.
Leasing business equipment allows you to get what you need at a low monthly cost. You pay for the equipment month after month while using it fully in your operations. The payments are fixed for the lease term.
Top 9 Benefits of Equipment Leasing
Here is a list of how equipment leasing can benefit your business.
1. Improved Liquidity
Your cash flow doesn’t have to take a hit from making large upfront payments on expensive equipment. This can help improve your liquidity situation, which is usually an Achilles heel for new startups.
By leasing, you only pay for what you use each month. If your company has an unexpected loss in revenue or an increase in spending elsewhere, you’ll have the financial agility to stay afloat.
2. Reduced Maintenance Burden
Does your business require much support and maintenance for each piece of equipment? Outsourcing allows your vendor to handle this aspect, which means that leasing can help you avoid dealing with maintenance costs yourself.
You won’t have to worry about maintaining the equipment or hiring someone else to do it for you.
3. Easy Upgrades
When you lease your business equipment, most contracts mandate the provider to furnish you with timely upgrades when they are due. This allows you to stay current with the latest technology without disrupting cash flow or creating excess debt on your balance sheet.
4. Healthy Credit Scores
Businesses often finance their purchases through a loan or credit card. This can affect their credit rating if they default on payments or fail to pay off their debt promptly.
However, the leasing system allows businesses to maintain good credit ratings. This happens when they make payments on time every month and provide proof of payment with regular monthly statements.
5. Reduced Expenditure
Leases allow companies to make capital investments without affecting their bottom line. Companies can use leases to free up cash that would otherwise be tied up in fixed assets.
6. Tax Deductions
Leasing equipment offers tax deductions that help reduce your tax liability. You can deduct the interest on the lease payments and depreciation for tax purposes. You can also deduct any maintenance and repair costs associated with leased equipment from your taxes.
For example, if you lease a server and pay $200 per month for maintenance, you may be able to deduct those costs from your annual taxes.
7. Improved Return On Asset
Companies often evaluate profitability and performance based on return on assets (ROA) and return on equity (ROE).
Operating leases frequently improve ROA and ROE seeing as equipment and project expenditures are paid for in future dollars.
8. Allows For Flexible Leasing Terms
Tailor your lease terms and agreement to your exact business needs. Use a reputable supplier that allows for custom lease agreements so that you have absolute confidence and control.
9. Option To Purchase
If you decide you want to own the equipment/ software at the end of the lease, simply pay the amount specified in the terms of the lease.
How Long Can You Use Leased Equipment?
The duration of your lease and your contractual obligations may depend on how much money you want to invest in new equipment compared to how much you want to spend on ongoing monthly payments for those items.
Most IT leases are for three years or less because the technology changes so rapidly that it’s difficult for companies to justify a longer-term commitment.
The beauty of leasing equipment is that you have the freedom and flexibility to draw up a contract that best suits your needs.
How Can Stellar Communications Assist With Equipment Leasing?
Stellar Communications provides a wide range of premium business telecommunications products that are consistently designed to suit the requirements of your business.
We can quote you on all equipment options, including SIP trunking, hosted VoIP, wireless, cell phones, enterprise-grade security, and loads more.
We understand the importance of relying on a trusted, long-established distributor that can offer you quality products.
If you’re in the market for a custom lease plan for your business, we can help you choose from a variety of lease terms to suit your needs.
Conclusion
Equipment leasing is a valuable option that can be highly beneficial to most companies, especially in the current US economic climate.
There are a number of advantages to taking this route, such as no ongoing ownership costs, setup fees, or maintenance fees. And the knowledge that if your business grows, you can upgrade equipment without worrying about high upfront costs.
If you’re looking for a reliable and trusted provider, contact us for an obligation-free quote today.
Stellar Communications, LLC offers lease financing services from GreatAmerica Financial Services.
GreatAmerica is a $2 billion national commercial equipment finance company. Incorporated in 1992, GreatAmerica has a staff of over 500 employees.
It is headquartered in Cedar Rapids, Iowa, and has offices in Minnesota, Georgia, and Missouri. GreatAmerica provides financing and consulting services in all fifty states and some U.S. Territories.
For information on leasing services, call 1-800-234-8787 or visit greatamerica.com
