Financing Equipment? Best Practices and Success Tips For Operating Leases And Capital Lease Solution
Financing equipment challenges. It's almost too easy to have that ' 3rd down and 110 yards to go ' feeling when it comes to asset finance. That's why a properly selected and structured capital lease or their counterpart, operating leases might just give you that ' touchdown' feeling. Let's explain.
The concept of making good decisions around the financing of your business assets solves the problem of reducing capital outlay - and that's whether you're starting a business or if you're a major corporation.
Probably 9 out of ten clients we talk to focus solely on their new found ability, with lease finance, to pay a specific fixed amount every month. They have budgeted for that, they feel they can make the payments, and at the same time the asset or assets financed help them run and grow the business.
ThatâEUR(TM)s a logical and ' ok ' line of thought. But in fact you might be missing the boat when it comes to other major advantages of this method of Canadian business financing - those might include upgrade ability, wrestling with obsolescence and the real useful ' economic life ' of the asset you are acquiring. No more clear an example is when you lease computers, telecom and software, which constantly evolves technologically and requires upgrades and changes to keep your firm competitive.
And we don't want to forget the tax and accounting benefits that come with a properly structured lease - they are key to maximizing the benefits we are discussing. Although operating leases, or ' leases to use assets, not own them ' are somewhat under attack in the accounting world these days they still can provide significant cost savings and flexibility when it comes to purchasing, returning, or extending your asset finance transaction.
The challenge that sometimes seems so simple can actually be your most time consuming when it comes to asset financing and lease financing. That challenge? Figuring out who to deal with! One thing we can say is that lessors are more motivated to approve your transaction, as they are solely focused and in the business of doing one thing - leasing business assets in all categories.
Typical capital lease and terms in Canada range from 2-5 years, and operating leases tend to be in the 2-3 year category - given that they are much related to upgrades, returns, and lower payments coming from your lessorâEUR(TM)s investment in the asset. When it comes to capital leases the arithmetic is very simple - the longer the lease term the lower the monthly payment, and if there is a down payment required that of course also lowers the monthly rental on the lease.
Where thing sometimes go awry is when the Canadian business owner or financial manager doesn't quite understand that leases can't be terminated without a penalty of some sort. That's why negotiating the right type of lease, and the right term based on your specific asset being financing is key.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing equipment needs. All of a sudden 3rd down and 110 doesn't seem so daunting!
Stan Prokop [http://www.7parkavenuefinancial.com/stan-prokop]
The concept of making good decisions around the financing of your business assets solves the problem of reducing capital outlay - and that's whether you're starting a business or if you're a major corporation.
Probably 9 out of ten clients we talk to focus solely on their new found ability, with lease finance, to pay a specific fixed amount every month. They have budgeted for that, they feel they can make the payments, and at the same time the asset or assets financed help them run and grow the business.
ThatâEUR(TM)s a logical and ' ok ' line of thought. But in fact you might be missing the boat when it comes to other major advantages of this method of Canadian business financing - those might include upgrade ability, wrestling with obsolescence and the real useful ' economic life ' of the asset you are acquiring. No more clear an example is when you lease computers, telecom and software, which constantly evolves technologically and requires upgrades and changes to keep your firm competitive.
And we don't want to forget the tax and accounting benefits that come with a properly structured lease - they are key to maximizing the benefits we are discussing. Although operating leases, or ' leases to use assets, not own them ' are somewhat under attack in the accounting world these days they still can provide significant cost savings and flexibility when it comes to purchasing, returning, or extending your asset finance transaction.
The challenge that sometimes seems so simple can actually be your most time consuming when it comes to asset financing and lease financing. That challenge? Figuring out who to deal with! One thing we can say is that lessors are more motivated to approve your transaction, as they are solely focused and in the business of doing one thing - leasing business assets in all categories.
Typical capital lease and terms in Canada range from 2-5 years, and operating leases tend to be in the 2-3 year category - given that they are much related to upgrades, returns, and lower payments coming from your lessorâEUR(TM)s investment in the asset. When it comes to capital leases the arithmetic is very simple - the longer the lease term the lower the monthly payment, and if there is a down payment required that of course also lowers the monthly rental on the lease.
Where thing sometimes go awry is when the Canadian business owner or financial manager doesn't quite understand that leases can't be terminated without a penalty of some sort. That's why negotiating the right type of lease, and the right term based on your specific asset being financing is key.
Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your financing equipment needs. All of a sudden 3rd down and 110 doesn't seem so daunting!
Stan Prokop [http://www.7parkavenuefinancial.com/stan-prokop]