Construction Equipment Leasing
Leasing construction equipment for your business is an excellent choice. According to industry research, approximately $3,401,620,772 of construction equipment is financed each year by businesses in the United States. These businesses lease construction equipment because they know that leasing offers numerous advantages over other types of financing, including tax deductions, balance sheet management, immediate write-offs, great flexibility, customized solutions, better asset management, improved cash flow, flexible end of term options, easy upgrades, and fast processing. At Beacon Leasing we have helped numerous of contractors and construction companies lease the equipment they need to succeed.
Leasing when Lacking the Funds
When businesses need machinery, computers, copiers or any other equipment but lack the cash, they often opt for a true lease agreement which is similar to renting a piece of machinery or furnishings for an extended period of time with the intention of exchanging, or upgrading items at the end of the term or when newer models become available. Lessees have the advantage of having access to state-of-the-art tools and accessories without paying top dollar. True equipment financing may be more popular because monthly installments tend to be lower than a equipment lease agreement, which works similar to buying on an installment plan. Companies which offer business accessories on a true lease can make more revenue by renting items again and again to various individuals and businesses. For example, a company finances a copier to a small firm for one year, at the end of which the lessee decides to upgrade to a pricier model with more features. The copier company has the option of leasing the older unit to another business owner, and another, until the original wholesale price of the copier has doubled or even tripled, especially when financing fees are added.
Optimizing Capital Equipment
Many physician group practices struggle over whether to buy or lease equipment. While purchasing has been the traditional method of acquiring equipment, leasing often can be more cost-effective. Conducting a lease-versus-purchase analysis can help group practices arrive at the most cost-effective
decision. Careful consideration of the alternatives can lead to the best use of the group’s resources to meet its financial goals.
Whether to lease or buy medical equipment is not always a clear-cut decision. Purchasing is the traditional method of equipment acquisition for most group practices, and many continue to use cash to acquire needed equipment.
The pressure to reduce healthcare delivery costs, however, has made more stringent reviews of capital equipment acquisitions imperative. As a result, more group practices are choosing to lease medical equipment. The advantages of leasing include flexibility, convenience, and protection against technological obsolescence. And, in many cases, leasing can be more affordable than purchasing.
Decision Factors
Analysis of major capital equipment acquisitions needs to go beyond a simple return on investment (ROI) or hurdle rate analysis and consider other factors, including the estimated technological life of the equipment and the group’s financial position.
Technological life of the equipment. The equipment’s useful technological life should be considered in light of the group’s long-term goals. Equipment that is projected to become obsolete over an anticipated period of use is a good candidate for leasing. A properly structured lease allows the user to shift the risks of technological obsolescence to the lessor and acquire new technology at the end of the lease term. The lease also allows the user the flexibility to purchase the equipment or renew the lease if the group decides the equipment can continue to provide the required level of performance . Click here for more.
Financing Equipment in Today’s Economy
The decision of whether to buy our lease equipment has always been a big debate for business owners. In today’s economy it is especially important to make the right choice. With the recession at full swing leasing has become a popular choice among businesses. Today 8 out of 10 businesses in the United States have some type of lease.
If the recession has taught us anything, it is to hang on to capital for a rainy day. Leasing can be a great way to maintain adequate cash flow while still having the equipment necessary to operate the business. It is much easier to finance equipment than it is to finance money for payroll. It is said in business that cash is king, and leasing allows for businesses to maintain higher levels of cash by not having to pay the full purchase price of the equipment all at once.
It has always been a rule of thumb for business owners to buy what appreciates, and lease what depreciates. It used to be that almost all real estate and property values increased the longer you owned it. Lately with less and less people buying real estate, the values have been holding steady, and even decreasing. This makes the option of leasing a lot more attractive. Most leasing agreements allow for a buyout at the end of the lease term. When the economy does pick up and property starts to appreciate again, there is always the option to buy.
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