A Well Structured Lease: Advantages of Leasing Technology

For each industry, indeed, for each and every company doing business today, there are advanced technologies or improved ways of accessing information that can make a positive impact on the success of that business. Whether it be new or upgraded equipment, faster computers, or breakthrough software, there's no denying that businesses depend on the efficiencies of new technology for improved productivity, customer service, and bottom line performance.

Yet so many industries continue to do business as usual with antiquated systems. Why is this so? Because the assumption is that technology is unaffordable and is advancing at such a rapid pace that the useful life of equipment is shorter than the term of the financing agreement. Or, the acquisition will deplete available (and often limited) cash reserves.

These assumptions, while based on certain truths, are all myths. The fact is - through a well structured lease, your company can acquire the equipment or technology it needs right now and well into the future. Leasing not only makes it possible, it makes it affordable and it makes good business sense. Here's why.

Advantages of leasing versus bank financing or cash purchase include:

• Conserves capital and improves cash flow. Lease payments can provide the lessee with increased cash on hand, especially during the first year of use, since there may be less out-of-pocket cash for a down payment.
• Up to 100% financing provided through the lease (which may even include shipping and installation charges), as opposed to a loan, which typically requires a significant down payment.
• Preserves bank lines of credit which are increasingly difficult to extend. Your available credit line remains intact at your bank since the lease is handled through and payable to another funding source.
• Fixed terms and payments are predetermined so that you can accurately predict future equipment costs and cash needs. The structure of the lease may also provide for skipped payments to accommodate seasonal slumps or changing cash flow needs.
• Full use without ownership upon delivery. Your business can begin using the equipment and operating more efficiently immediately.
• High availability and performance Properly maintained leased equipment outperforms the older, breakdown-prone equipment you may still be using. When you lease equipment you have the option to upgrade your equipment on a regular basis - ensuring it is always available when needed most and performing at peak efficiency.
• Hedge against inflation A lease locked into today's lower interest rates protects you from fluctuating rates often associated with bank financing. Plus, your lease can be structured with long-term level lease payments which further protect you from inflationary trends.

So ask yourself, "Is my company using cutting edge technology? Are we taking advantage of the new or improved equipment, hardware, or software that can increase productivity in every possible way?"

If you answered no, then perhaps you should consider a lease for your next acquisition. Chances are, your competition has. And the reason is clear - It's a smart alternative that can help your business keep pace with future technology that is available and making a difference to those employing it today.

Yvon Bergevin, President, LeaseLinc, Inc. (301-299-8852)