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As you run your business, equipment will wear out or become outdated – and, as your business grows, you’ll probably find yourself needing more of it. Whenever you need to replace or add to your business’s equipment, it’s important that you decide whether it makes more sense to lease what you need or buy it outright. To help you decide, here are some pros and cons of business equipment leasing.
By leasing, you aren’t tying up capital that could be used in more beneficial ways for your business, which could include hiring the star salesperson or by paying invoices early to get a better deal. Plus, there’s typically little to no initial outlay of cash with leasing, which helps with your cash flow management – a crucial element of business success.
Plus, as you pay your lease payments on time, you build up a reputation as a business that meets its commitments, which helps boost your business line of credit. This also helps with cash flow management. As just one scenario, perhaps there is a company that you’d really like as a customer, but you need to outlay some cash to get their program started. With a boosted business line of credit, though, you can do just that, further expanding your company’s reach.
That’s not all! With business equipment leasing, you are locked into the cost at signing, so you won’t have to worry about rising payments (helping you to manage cash flow!). Be sure to also consult with your accountant about tax benefits, which can be significant.
If your equipment breaks down and needs repair – or just needs maintenance – leased equipment comes with manufacturer’s warranties. Plus, if you only need your equipment for a short amount of time, perhaps to meet an increased demand at a certain time of year, a shorter-term lease could be the answer.
If your equipment becomes outdated, which happens more and more in today’s rapidly-changing world of technology, a lease gives you the freedom to purchase new equipment at the end of the agreement, rather than sticking you with equipment that is already becoming obsolete. And, the responsibility of disposing of old equipment is taken off of your shoulders so you can focus on what you do best – running your business.
If you’re certain that a piece of equipment won’t become obsolete, then it may make sense to buy it outright. One strategy to consider: if you think you might want the equipment for the long haul, try to negotiate a lease whereby a part of the lease payment goes towards the purchase, if you decide to buy the equipment outright at the end of the lease.
If you decide that leasing makes sense for your business, take a look at the options that we provide. Then contact us about your equipment lease financing needs online or by calling us at 203-354-3654. We offer a wide range of solutions, one likely to be just right for you.