Equipment leasing makes sense to many businesses. They don’t have to invest on new equipment and incur depreciation which is very high. They can conserve their capital and get full tax benefits as well. This article explains office equipment leasing.
Advantages of leasing office equipment
Here's how leasing office equipment can help: 1. Businesses can conserve capital by leasing equipment. As office equipment is given on lease, the private lenders, the upfront charges and the monthly payments are nominal as compared to what would have been if a bank loan was taken. This allows businesses to conserve precious capital. Low monthly payments come from revenues, and this gives a business more flexibility. 2. Depreciation on new office equipment is high and new equipment fetches very low resale value once it is put to use. 3. Lease payouts are fully tax-deductible, so long as the lease is structured correctly. So, you pay lesser taxes when you lease equipment. 4. In case IT equipment is leased, the lessee's business is guarded against technology obsolescence. 5. Many start-up firms find it difficult to obtain finance. Equipment leasing helps them to set up the business and to run it without worrying about the finance. 6. Leasing deals are fast and the business can get its equipment, and start operations in no time.
Process of negotiating an office equipment lease
The process Getting office equipment on lease is a simple process. The business has to prove that it is creditworthy and can pay its lease rentals on time. The collateral security is the equipment and the lessee's business does not have to pledge anything else. Once the lender is convinced, the deal is on. Who should lease - Businesses that are starting-up/venturing into a business they are unsure of - Businesses who want to use their capital in an opportunity that will fetch more money - Technology-sensitive businesses that want to use the latest technology without having to invest in it and watch it depreciate, and then clamour for newer technologies. Computer equipment leasing can save money because of the obsolescence factor. Negotiating an office equipment finance lease The lessee should inform the lessor that the cost of replacing the equipment would be much cheaper leading to lower lease rentals in the future. So now, it would be in the lessor’s interest to give the equipment at reduced rates. Most lessors have equipment ready for use and are willing to negotiate. Negotiate on the basis of the current economic conditions. The recession has knocked the wind out of the sails of many private lessors, and they are keen to get good clients. So, if you’re a good, creditworthy client, you can bargain hard for lease of office equipment in the U.K.