How Equipment Leasing Can Limit Exposure for Businesses
Cash is King, as the saying goes. Starting up a new business or keeping an existing business running smoothly takes plenty of it, and you never know when the demand for cash may exceed your ability to generate it. This makes retaining efficient cash flow and cash reserves essential to avoiding financial exposure to your company.
Exposure can present itself in a variety of forms or conditions:
Loans are reflected on company books as ordinary debt. Depending on the type of lease and equipment, lease payments may be considered simply as an operating expense. Debt can also impact your credit rating and financial standing.
Utilizing Equipment Leasing to Limit Exposure
Equipment leasing is a responsible alternative to parting with significant capital to purchase heavy equipment and fleet vehicles. Exposure is limited through several attractive advantages presented by equipment leasing:
Credit rating – companies can actually improve their credit ratings through demonstrating effective use of capital and lower debt ratios. This is especially true of startups with limited capital at their disposal.
Capital retention – equipment leasing generally results in lower payments than loans while keeping your capital in reserve for other purposes.
Improvements – moving up to additional features on leased equipment is typically a simple upgrade with only a modest increase in payments over the term of the lease.
Terms – lease terms can be structured for companies’ specific needs and financial positions. Special payment terms such as quarterly or even seasonal payments may be arranged for businesses where such terms are more suitable to their revenue streams.
Leveraging the advantages of equipment leasing and innovative financing structured for your specific needs improves company cash flow and frees capital for other essential purposes such as research and development, building your sales force, or investments in new technology that advance your business operation. There can also be significant tax advantages from equipment leasing. Consult with your financial advisor or accountant to determine tax implications.
Demonstrating efficient use of capital and responsible debt management builds your credit rating and increases confidence on the part of customers and financial institutions. Financial tools such as an operating lease may be the right option for a company that expects to retain the equipment and can benefit from the attributes of writing off the entire monthly payment while also keeping the debt off your ledger due to the financial structuring similar to a rental.
When you need equipment leasing services or quick financing for trucks or heavy equipment acquisition, keep your cash flow intact by turning to the equipment leasing specialists at Equipment Finance Services. Our financial experts are knowledgeable in the economics of operating truck fleets and heavy equipment and can assist your businesses with determining the optimal purchase/lease options that maximize your cash flow and limit your exposure.
Contact us today to get started with financing and leases structured to meet your specific needs.