Advantages of Leasing

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  • Conserve cash reserves Money is kept 'in the business' rather than in depreciating assets. Leasing allows the customer to save resources for other purposes, such as new business opportunities, unexpected needs, business development or marketing. The customer can tailor the timing of the payments to suit their expected cash flow including seasonal cash flow circumstances. (For example, an initial payment holiday). 

  • Budget outgoings Medium term planning: The customer will know what their payments are going to be, right from the start. These can be monthly or quarterly. The finance will be secure for the term of the agreement; it cannot be recalled early like a bank overdraft.

The payments are also fixed for the length of the term, which enables easier forecasting of cash flow.

  • No extra security required The equipment itself is normally the only security required on a finance agreement.

If the customer borrowed from the bank to buy the equipment instead, they would normally have to provide extra security or the rates would be substantially higher

  • Tax advantages Due to the nature of the tax advantages of leasing (i.e. the full rental costs being offset against profit), and taking into account the opportunity cost of investment, the lease will usually work out cheaper than if the asset were bought for cash

  • Maintains credit lines for other use Equipment can be acquired without impacting other credit lines, such as loans and overdrafts, making further borrowing easier

  • Upgrade to the latest equipment The flexibility of a lease allows the customer to upgrade ageing or obsolete equipment for more technically advanced products, and the monthly rates can be adjusted accordingly. When leasing, the customer is not limited to acquiring the equipment that they can afford to pay at the time. Monthly payments enable the customer to select the equipment that is most beneficial for their business.