Because you don’t commit your capital to purchase equipment, it is available for other important business expenses. You have money to increase inventory, expand sales, or hire needed personnel. The average return on working capital in business is 18% after taxes. Leasing gives you more working capital to support business transactions.

Leasing conserves credit

A lease is not a bank loan. Borrowing directly from a bank to purchase equipment reduces available credit. In its own way, leasing is a new source of credit, but doesn’t impact credit worthiness.

Off balance sheet accounting

Because leased equipment is not recorded as an asset, it also is not maintained as a liability. The leasing company pays the property taxes and tracks the depreciation. This further preserves credit for other purposes.

Fast tax write-off

A true lease can be written off 100% as an operational expense. Each rental payment is completely deductible. If the equipment had been purchased under a conditional sale or instalment basis, only the interest and depreciation allowed each year by the Tax Office could be deducted.

Eliminates obsolescence

If you do not own the equipment, you won’t keep it beyond its useful life. If you buy it, the depreciable life may be longer than the useful life of the product. Therefore, you may use it past the point where better, more efficient equipment really should be in production. For instance, most computers are seldom useful after three years, but may be stuck on the books for five years.

Leasing provides flexibility

You have options concerning the buy-out on a lease. For instance, if you choose a Fair Market Value lease, you may purchase it at current value or simply return it at the end of the lease. You can trade your equipment for upgrades. You can structure the lease so the purchase price is a dollar. There are many ways to make a lease meet your business needs.

You choose the equipment and vendor

You specify which equipment you need for your business and from whom it should be acquired. All manufacturers’ warranties are passed to you.

Promotes company growth

By keeping your money in motion, your investments in inventory will yield higher profits than letting your capital languish in fixed equipment.

Let your equipment earn its keep

When you purchase equipment, you’ve paid for functionality and production capability you won’t be able to use for years. With leasing, your equipment payments are made as the equipment supports business productivity and produces an income.

Procedural Details

Working with your consultant

Your cash flow consultant works with leasing companies specializing in the non-banking market. If traditional leasing arrangements aren’t working for you, your consultant may be able to find a funding source that will. Depending on your situation, the rates charged for the lease may be somewhat higher than you expected. Remember, however, if you have a good business plan and the equipment is standing between you and a profit, a slightly higher payment may not be significant enough to impact your bottom line. Furthermore, the leasing charges still may offset other expenses you would have with a purchase.

WCI only selects funding sources with outstanding reputations for honesty, integrity, and a willingness to fully disclose all the details. We welcome the opportunity to help our clients make only the best decisions for their business.

Reviews can be made quickly, and once approved, funding is usually provided within two business days.