The urge to maintain complete control of a business through outright ownership of all operational assets is a natural one, and, in a few rare instances, it may make sense to act on this instinct. For many businesses, however, the benefits of equipment financing or equipment leasing outweigh those of outright ownership. For these companies, leasing or financing equipment provides several ways to stay agile and viable in the marketplace by avoiding opportunity costs that are incurred when large chunks of capital are tied up in expensive equipment.

Keep Cash Flowing

A large outlay of capital for equipment purchases reduces a company’s ability to budget for other operational needs. This is especially troublesome for new businesses, which may be strapped for cash as they struggle to establish themselves in the marketplace. Equipment financing and leasing frees up cash flow, so that instead of allocating the majority of resources to the acquisition of necessary equipment, operators are able to fund other areas of the business including marketing, research and development, and expansion.

Stay Relevant in the Face of Changing Technology

Even the best companies will fail if they allow their services to be obsolesced by new technology that changes the rules of the game. A shipping company that purchases a fleet of trucks that run according to this year’s fuel efficiency capabilities will be at a competitive disadvantage in the marketplace if next year a rival begins using a newly introduced truck that allows them to save money by cutting fuel expenditures. By entering into leasing agreements, businesses can avoid being locked into long-term commitments to the equipment they use, allowing operators to stay nimble and ready to adapt to new technologies that advance quality and efficiency standards in […]