7 Reasons Why Lease Financing Companies Offer Advantages of Leasing Equipment in Canada
Great Equipment Leasing Ideas for Canadian Business
It isn't enough to be only a ' little' in the know when it comes to business financing and your Canadian firms overall growth and success. Let's examine 7 solid and beneficial reasons how lease financing companies can demonstrate the advantages of leasing equipment for your company.
It's a simple question really. '˜Why Do Lessees Lease'? There are a variety of solid reasons and advantages and benefits to equpment financing in Canada.
We're isolated 7 of those reasons (lucky # 7?) to demonstrate the general financing power of this Canadian business financing strategy.
Reason #1 - 80% of all companies in North America lease equipment at one time or another. Not a great reason you say? We at least hope that you'll agree that if your competition is doing something you should at least be aware or analyze why that the case. As you will see your competition has focused on issues such as working capital preservation, accounting benefits, and plain old convenience.
Reason #2 - Tax benefits. The last thing we want clients to do is get caught up in the whole issue of tax treatment of leases, let's leave that to your accountants and business advisors. But the reality is that there are significant benefits that are tax oriented when it comes to the product offering of lease financing companies in Canada. They include such critical factors as depreciation, off balance sheet financing, etc. Again, leave it to the experts, but it's a solid aspect of equipment finance in Canada.
Reason # 3 - Matching financing to useful economic life. What are we talking about? Just common sense really, which is simply the fact that one of the advantages of leasing equpment in Canada is that you can match the estimated useful economic life of any asset you purchase (from a photocopier to an airplane!) to your lease term. Technology is a great example of this, in that it depreciates quickly, has a huge obsolescence issue attached to it, and your ability to craft lease financing that matches the tech asset is huge. At the other ends of the spectrum, lease that corporate jet for 10, 15 or 20 years, there's an asset that hangs around for a long time!
Reason #4 - Solid lease rates. The great news is that Canadian equpment leasing and financing is on a total upswing as we head thru 2011. The industry has revitalized, recapitalized, and is very competitive. A lot of the lease finance pricing you obtain will be competitive to bank rates and other forms of finance such as term loans for assets.
Unfortunately many clients we speak to for the first time on asset finance are overly focused on rate. Our point is that it's a competitive environment, and your current credit quality will get you a good rate in the current finance environment, so you'd do a lot better, we feel, if you focused on some of those other advantages we're talking about.
Reason #5 - Assets. They come in all shapes and sizes for your firm and industry. Tech assets, production assets, etc. The only bottom line... simple... any asset can be financed using a lease strategy. So if the cost and turnover of assets is a constant consideration utilize lease financing as a regular ' refresh ' strategy.
Reason # 6- Measurements. Measurements? What we're talking about is simply that how your business owners, investors, or shareholders are measure can sometimes be significantly impacted by the assets you acquire. Return on assets, return on equity, ebitda, are key ways to measure whether your company is winning and losing. Lease financing can often impact all of these measurements, and depending on what your ' business scorecard ' is, can help you manage capital and assets.
Reason # 7- Last, but not least, isn't it always about Cash flow. It sure is, and if your company is either as start up or a Canadian Financial Post 100 firm you have cash flow challenges, issues, and measurements around that term. Lease financing allows you to eliminate a lot of those working capital worries, it minimizes or gets rid of down payment issues, pays the supplier and vendor promptly, and can provide 100% financing for your asset. Very simply, it conserves cash.
Well, that's it. Are the advantages of leasing equipment better than other capital asset strategies? We think so, but that's for you to decide. And getting back to the competition, they're doing it, so why not speak to a trusted, credible and experienced Canadian business financing and leasing advisor who can assist you tomaximize these benefits.
It's a simple question really. '˜Why Do Lessees Lease'? There are a variety of solid reasons and advantages and benefits to equpment financing in Canada.
We're isolated 7 of those reasons (lucky # 7?) to demonstrate the general financing power of this Canadian business financing strategy.
Reason #1 - 80% of all companies in North America lease equipment at one time or another. Not a great reason you say? We at least hope that you'll agree that if your competition is doing something you should at least be aware or analyze why that the case. As you will see your competition has focused on issues such as working capital preservation, accounting benefits, and plain old convenience.
Reason #2 - Tax benefits. The last thing we want clients to do is get caught up in the whole issue of tax treatment of leases, let's leave that to your accountants and business advisors. But the reality is that there are significant benefits that are tax oriented when it comes to the product offering of lease financing companies in Canada. They include such critical factors as depreciation, off balance sheet financing, etc. Again, leave it to the experts, but it's a solid aspect of equipment finance in Canada.
Reason # 3 - Matching financing to useful economic life. What are we talking about? Just common sense really, which is simply the fact that one of the advantages of leasing equpment in Canada is that you can match the estimated useful economic life of any asset you purchase (from a photocopier to an airplane!) to your lease term. Technology is a great example of this, in that it depreciates quickly, has a huge obsolescence issue attached to it, and your ability to craft lease financing that matches the tech asset is huge. At the other ends of the spectrum, lease that corporate jet for 10, 15 or 20 years, there's an asset that hangs around for a long time!
Reason #4 - Solid lease rates. The great news is that Canadian equpment leasing and financing is on a total upswing as we head thru 2011. The industry has revitalized, recapitalized, and is very competitive. A lot of the lease finance pricing you obtain will be competitive to bank rates and other forms of finance such as term loans for assets.
Unfortunately many clients we speak to for the first time on asset finance are overly focused on rate. Our point is that it's a competitive environment, and your current credit quality will get you a good rate in the current finance environment, so you'd do a lot better, we feel, if you focused on some of those other advantages we're talking about.
Reason #5 - Assets. They come in all shapes and sizes for your firm and industry. Tech assets, production assets, etc. The only bottom line... simple... any asset can be financed using a lease strategy. So if the cost and turnover of assets is a constant consideration utilize lease financing as a regular ' refresh ' strategy.
Reason # 6- Measurements. Measurements? What we're talking about is simply that how your business owners, investors, or shareholders are measure can sometimes be significantly impacted by the assets you acquire. Return on assets, return on equity, ebitda, are key ways to measure whether your company is winning and losing. Lease financing can often impact all of these measurements, and depending on what your ' business scorecard ' is, can help you manage capital and assets.
Reason # 7- Last, but not least, isn't it always about Cash flow. It sure is, and if your company is either as start up or a Canadian Financial Post 100 firm you have cash flow challenges, issues, and measurements around that term. Lease financing allows you to eliminate a lot of those working capital worries, it minimizes or gets rid of down payment issues, pays the supplier and vendor promptly, and can provide 100% financing for your asset. Very simply, it conserves cash.
Well, that's it. Are the advantages of leasing equipment better than other capital asset strategies? We think so, but that's for you to decide. And getting back to the competition, they're doing it, so why not speak to a trusted, credible and experienced Canadian business financing and leasing advisor who can assist you tomaximize these benefits.
Published by Stan Prokop
Stan Prokop is the founder of 7 Park Avenue Financial. See www.7parkavenuefinancial.com The company originates Canadian business financing for companies and is a specialist in working capital and asset b... View profile
- IT Equipment Leasing - Why Computer Equipment Leasing Makes Sense in Canada!Information on why '˜ IT '˜ ( Information technology Leasing ) makes sense and why small business owners and major corporations choose computer equipment leasing as their preferred method of technology acq...
- Equipment Leasing Companies - Three Things You Must Know About Equipment Leasing...Information on what Canadian business owners and financial managers must know about equipment leasing companies in Canada and how to achieve best equipoment leasing structures for your firm .
- Benefits of Leasing Your VehicleThis article discusses the advantages of leasing your vehicle.
- Why Asset Finance, Aka Asset Based Lending is the Ultimate Working Capital Finan...Information on what Canadian business owners need to know about an asset finance solution . What are the advantages of asset based lending, and how does this working capital financing solution differ from traditional...
- Advantages to Leasing a VehicleExplores the perks of leasing a vehicle.
- Reasons and Advantages for Using Equipment Leasing for Your Business Finance Needs...
- What Are the Advantages of Leasing Office Equipment?
- Equipment Financing Companies Canada - 3 Things You Must Know
- What Are the Advantages of Sale Leaseback Equipment Financing in Canada? Are Ther...
- Top 4 Most Overlooked Benefits of Leasing of Equipment as a Business Finance S...
- Considering Equipment Finance in Canada ? '" Why Equipment Leasing is Your Fi...
- Equipment Financing - Capital Leasing Options that Make Sense