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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 their fields.

Find a Flexible Financing Agreement to Fit Your Business

There are several lending sources, both traditional and nontraditional, that offer equipment financing, and with the current liquidity in credit markets, many have a strong incentive to write loans. Many lenders offer 100% financing with no down payment, which can be an excellent option for small businesses and startups which may not have capital to devote to outright ownership of equipment. Additionally, some lenders may offer financing with repayment schedules that mirror the revenue cycle of businesses whose sales fluctuate with regularity throughout the year.

Let Somebody Else Worry About the Details

Equipment leasing companies may offer service contracts that remove the burden of equipment maintenance from a business operator’s list of worries. Contracts may also allow companies to upgrade to new equipment within the terms of the contract. Additionally, installation of equipment and staff training on its use may be available at different service levels of an individual agreement.