YOUR COMPANY IS LOOKING FOR BUSINESS FINANCE SOLUTIONS
VIA ASSET FINANCING!
EQUIPMENT LEASING / FINANCE LEASE SOLUTIONS IN CANADA
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Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
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7 Park Avenue Financial
South Sheridan Executive Centre
2910 South Sheridan Way
Suite 301
Oakville, Ontario
L6J 7J8
Leasing is used by over 80% of all North American businesses. But do those firms that currently choose finance solutions via leased assets really have more going for them vs. those ' have nots' who are constantly searching for an asset finance solution? Let's dig into those leasing solutions!
WHAT IS THE CHALLENGE OF PICKING THE RIGHT LEASING COMPANY
Picking the right equipment financing partner and solution is as much knowing what’s going on as it asks the right questions. One of our mentors once said, ' I never learned anything listening to myself talk ‘!
LEASE FINANCING IS A YEAR-ROUND FUNCTION FOR COMPANIES BUYING NEW ASSETS
Equipment leasing is a year-round solution, depending on what’s happening in your company and your industry. There are numerous challenges in growing a business, and if your business and industry are dependent on new assets and technology ' refreshes,' you arrive at the right spot.
LEASE VERSUS BUY
Let's take a look at questions you should be asking when it comes to the end of your ‘lease vs. buy ' decision. One of the leasing tenets is that if an asset improves your business and has a longer life cycle or need for change, you should be leasing. Your ability to determine the right monthly payment allows you to consider cash outflows on the lease vs. benefits you will receive from increased revenues, profits, or improved processes.
Borrowers can choose between a capital lease or an operating lease. The lease term on each of these leases will dictate a dramatically different monthly payment/lease payments per lease accounting rules on handling residuals in operating leases. The accounting standards in financing leasing and operating leases should always be reviewed with your accountant.
In operating leases, the minimum lease payments' present value dictates whether it's a true operating lease via tax rules around lease accounting. Also, in operating leases, you can negotiate the ' fair value ' of an asset if you choose to purchase it at the end of the lease -. In contrast, in capital leases, typically a bargain purchase option, for example, 1 dollar, transfers title to the lessee at lease term. Normally lessees such as your firm have taken into account the asset's useful life and economic life and its benefit to your business.
WHAT IS THE BEST LEASING COMPANY
Next, it's important to determine what leasing company you want to work with. This might be on a long-term relationship basis or simply for a specific one-time need. The right partner firm will allow you to clearly understand cash outflows on the lease, the transaction's actual structure, and any flexibility that might be required regarding the seasonality of payment. Also, a solid partner will give you some choices around the type of lease you need (capital or operating), as well as balance sheet or tax ramifications that come with equipment finance.
UNDERSTANDING EQUIPMENT LEASE TERMS AND BENEFITS IS KEY
The right partner will also help you understand the ramifications of the asset's residual value at the end of the term - under certain circumstances, you want to know how you can extend a lease, upgrade it, buy it out, or return the asset. End-of-the-lease options are often ignored by lessees when entering into a transaction when it's one of the most important lease finance aspects. Interest expense in leases is simply a factor of the following criteria - purchase price, lease term, end of lease future value and of course, the interest rate.
WHAT IS A MASTER LEASE
By the way, the right long-term lease partner is also capable of getting a one-time' MASTER LEASE' in place, allowing you to add schedules to the lease as you need new assets - bottom line = quick/easy.
Also, investigate your obligation around things such as insurance, maintaining /servicing the asset (if required) and knowing your legal rights around what the industry calls ' end of term. '
SOME MORE KEY BENEFITS OF EQUIPMENT LEASE FINANCING
So it's clear, you can choose to be a ' have not ' in lease financing, but some key basics and working with the right partner will put you in the coveted ' have more ' camp - giving you 100% asset financing, cash flow conservation, inflation hedge, and the ability to stay up to date with changing technology and fixed asset needs.
CONCLUSION
Looking for help on equipment leases and financing assets for your business needs? Let us show you the types of leases and different funding options to acquire equipment and technology needs required to grow your business. Whether its a short term rental or long term fixed asset, we have a solution and want to leverage our knowledge and expertise as your right asset financing partner - seek out and speak to a trusted, credible and experienced Canadian business financing partner who can assist you with your leasing finance solutions in this dynamic financial services industry.
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Stan Prokop
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