What is Better – to Lease or to Buy Equipment?

Posted by Accounting Diary

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Many small business owners assume that investing in new equipment is a financial gable with an un-manageable price tag.

Well,this is probably because Small businesses have difficulty raising capital - that's no secret. But Leasing equipment may be a better option for your business's equipment financing.

Equipment leasing is simply a process by which you obtain the use of a certain asset like a car, computer or software solution for which you don’t pay the full purchase price but instead you only pay a series of contractual, periodic payments while you use the equipment.

If you are worrying about how realistic your plans are (or if colleagues and friends have raised doubts), here is my take on the advantage of leasing computer equipment.

Technology will always change while on the other hand, not every jim and Jack has a budget readily available for these changes that is why a growing number of companies in this credit-tight economy are looking at leasing as a smart option that is accompanied by little risk.

Secondly, obtaining finance you need to purchase equipment is not easy, particularly where technology is concerned. Banks are more risk conscious than ever before, preferring safer investments of their funds such as real estate and more tangible assets.

For this reason many companies are finding it increasingly more difficult to obtain financing through overdrafts and loans.

I have often used this quotation on this blog and I will use it again, “Eneke the bird says that since men have learned to shoot without missing, he has learned to fly without perching” This Igbo proverb means People adapt to other people's learnings, particularly when the other person's learnings would harm you if you kept on your present course. In other words external factors can have effects on people so much that they change.

Leasing is the single largest form of external corporate finance in the world. In case you didn’t know, over 80% of companies – from small, start up to multinational companies at least lease one asset or the other.

I know that probably there may be very few leasing companies in your area but it is just a matter of time, remember what I said “people adapt to other peoples learnings”

About the Author:

Fixed Asset Consultant at Prosperity Agencies Limited with over 10 years practical experience in physical verification, bar-coding of assets and fixed asset software implementation


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yamini said...

I have really enjoyed reading about this blog,thank-you for sharing such a informative blog ..!

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