Why lease instead of buy?
Before we can discuss why to lease, first we should make sure everyone understands what a lease is. The Financial Accounting Standards Board (FASB), the private organization charged with developing the rules for public accounting for the United States, defines a lease as “an agreement conveying the right to use property, plant, or equipment (land or depreciable assets or both) usually for a stated period of time” (FAS-13, para. 1). Items commonly leased include real estate (office or store space, a warehouse, a parking lot), vehicles (cars, trucks, trailers), equipment (copiers, computers, machine tools). Almost any long-lived asset that you can purchase, you can also lease. Indeed, some assets are only available by lease; postage meters are one of the most common examples.
Businesses lease for several reasons….
This year, many mid-sized businesses will face an important decision that has more considerations than you might realize: Is equipment leasing or buying the better option for replacing or upgrading technology, increasing productivity or launching new product lines?
Beyond conserving cash, equipment leasing often eliminates maintenance worries and the burden of disposing of used and out of date equipment.
Leasing also enables businesses to determine their true equipment needs before committing a lot of capital to a purchase or a long-term deal.
There is no one right answer since every company is different. However, equipment leasing offers advantages that are often overlooked such as reducing business risk and improving your financial flexibility.
The most obvious benefit of equipment leasing is conserving cash. Cash is king, and leasing allows you to hold onto more of yours to take advantage of opportunities and …
The next time your business needs new computers, networking equipment or other technology, should you buy it or lease it? If you don’t know, read on. This month we’ll take a look at the benefits–and downsides–of both leasing and buying technology equipment, plus the questions you should ask to ensure you get the best deal.
Leasing: The Benefits
Leasing keeps your equipment up-to-date. Computers and other tech equipment eventually become obsolete. With a lease, you pass the financial burden of obsolescence to the equipment leasing company. For example, let’s say you have a two-year lease on a copy machine. After that lease expires, you’re free to lease whatever equipment is newer, faster and cheaper. (This is also a reason some people prefer to lease their cars.) In fact, 65 percent of respondents to a 2005 Equipment Leasing Association survey said the ability to have the latest equipment was leasing’s number-one perceived …