The Advantages of Leasing Equipment
Equipment leases provide some good advantages for businesses. Most companies do not have unlimited capital to spend on office equipment or computers. Leasing allows less cash to be consumed on support equipment, resulting in better production of goods and services from retained capital.
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Less Costly
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Equipment leases are cheaper for businesses than purchasing office equipment outright. Maintenance costs are avoided because the lessor company usually provides the repairs and routine maintenance as part of the initial lease. Some leases include ink cartridges and paper supplies in the lease contract as well.
Lower Financing
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Financing for office equipment is easier for leases than purchasing the equipment. Most financial institutions require a stable financial history for companies applying for loans to purchase equipment. Lease contracts do not require such lengthy financial information since the risk of ownership is not ultimately transferred to the lessee company.
Technology Upgrades
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Equipment leases may offer upgrade policies where companies can upgrade the technology in their current office equipment. Lease may include software upgrades, replace older equipment, or upgrade hardware for certain types of office equipment. These clauses help companies maintain a competitive edge over their competitors.
Better Equipment
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Businesses often are able to lease better equipment than what they could purchase since the leases are cheaper than outright purchases. This allows companies to lease office equipment that offers more functionality and technological advances than standard equipment. Having this upgraded equipment increases the productivity of a company's office personnel.
No Long-Term Debt
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A financial statement benefit for leases is that no long-term debt will appear on the company's financial statement. Lower balance sheet debt help maintain financial ratios relating to cash and equity. While leased assets are required to be reported under Generally Accepted Accounting Principles (GAAP), they do not create the negatives of long-term debt.
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