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Financial Leasing
purchase essentials, while keeping the necessary working capital
Leasing makes the most sense when it comes to purchasing goods that are essential for your business and keeping the necessary working capital free for the smooth running of day-to-day operations.
Today, leasing is an increasingly popular way to finance practically any type of asset, from furniture to high-tech medical equipment or an automatic milking machine for your farm. Leasing allows the use of an asset, while its payment in monthly instalments come over a pre-defined period.
What are the advantages a financial leasing would offer you?
Low cash flow
Possibility of investing the excess cash in other strategic projects
Projection of the costs of the financed asset over several years for the purposes of budgeting
Cheaper than a business loan
Improves the company's debt capacity as no balance sheet entry is required (off-balance sheet commitment)
Possibility to deduct monthly expenses for tax purposes
What else?
However, there are some things to bear in mind when entering a leasing contract. During the period of payment for the asset, it does not legally belong to the company but to the service provider (usually a bank). The leased asset will only belong to the company once it has been paid in full, i.e., at the end of the contract and on payment of the residual value if this has been stipulated in the contract. Furthermore, the company is responsible for paying the costs of insurance coverage for the leased item itself.
In summary, leasing remains a very interesting method of financing for companies, especially when they are entering a period of development where every expense must be carefully considered. If you are not sure though if financial leasing is fit for purpose, please contact our experts for advice.
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