Equipment Financing: Equip Your Business For Success

by : Edwin Linares

"Obtain the right equipment, software and furniture for your business whether small-scale or large-scale -- to ensure proper and optimum operations, thereby ensuring success and profit". All successful business managers know that in order to produce the best and most efficient results, regardless of the nature and type of industry that the business is in, the workforce must be properly equipped in order to deliver that.

There are several types of equipment financing to choose from. However, many have safely derived 'equipment leasing' as the best way to go.

First of all, equipment financing through leasing offers the least strain in capital. Imagine being able to reserve your working capital for activities and other investments that directly result to increased profit. Through leasing, complete financing on large ticket items that heavily drain company budgets can be converted to monthly, tax-deductible payments within your means.

In fact, leasing not only preserves operating capital, it also results to significant savings for the business. Fixed rate lease saves the company from variable interest rates, enabling operators to precisely predict monthly payments. Also, as mentioned above, equipment leasing is tax-deductible. Because cost of leasing is considered as a business expense, the monthly payments are then subject to tax. And, since the equipment is leased at the rate of the time of purchase, the operator is likewise protected from future inflation.

Apart from preserving operational capital, a separate credit line is established through leasing, thereby freeing up bank credit lines. Consequently, this results to continued strength in borrowing in case the need arises. No money has been borrowed; therefore cash credits are still available for the daily transactions of the business.

The term 'total financing' also deserves close attention in the discussion on equipment leasing. In contrast to conventional bank loans or bank financing where some costs like delivery, service contracts and taxes among others are not inclusive; these miscellaneous but necessary expenses may be incorporated in the cost of lease.

Furthermore, equipment financing through leasing is convenient. No down payment is required. Instead, an equivalent of one or two advanced payments is only needed. Documentation is easier and faster, with direct impacts on the business decision-making processes.

Now, let's talk about depreciation. Depreciation is inevitable for most, if not all, equipments, software and furniture. This is the hard truth. So, in this aspect, direct purchase would certainly not be the smartest investment option; another plus point for equipment lease financing.

The tricky thing about buying, say, a long-term equipment, is that after a period of time, that equipment becomes out-dated and obsolete, more specifically in relation to your growing company's current operational needs. In equipment leasing, equipment updates, add-ons or even trade-ins are possible. Actually, leasing terms with regard to expiration date may be timed to suit the productive life span of the equipment.

Now, with all points taken into consideration, it is no wonder that many clever business operators prefer equipment financing through leasing.

Keep this in mind. Consider equipment leasing Financing to help in the positive development of your business, improved productivity, and raise cash flow to give your business the edge above all competition.