Okiz! its time for our readers to have some interesting tips on some of the frequent activities of Facilities Management..As the topic suggests the article is all about leasing and its benefits.
When you start a business or grow in your existing business, cash is often in short supply. There is one option to spend less – lease essential office resources instead of buying them. Unlike taking them for rent, which is too pricey to consider as a long-term alternative, leasing telecom resources or furniture offers a number of critical advantages like the following:
- The classy merit of leasing is that it perk up your cash flow. Equipment leases seldom require down payments, except for some set aside cash for a refundable security deposit. In comparison, loans to finance the purchase of asset typically need down payments done up to 25 percent or more in certain cases.
- For new companies its even more easier to lease than to purchase. Because for them banks will want to review two to three years financial records which most newly started companies do not have. On the other hand only six months to a year credit history is required by the lessor before approving a furniture or an equipment to be leased.
- Another interesting fact is that leasing makes it simpler to keep pace with technology, especially for businesses relying on cutting-edge technology. A run of short-term leases will cost you less than purchasing new every alternate year.
- Some office resources leases even have yearly computer upgrades built into them, thus eliminating that difficult decision of whether you can afford to upgrade or not.
- Resources leasing allows you to afford more. While you might not be able to afford to purchase those expensive ergonomic seats your employees are asking for, you may be able to lease them. Better furniture and resources can create a more professional image and boost the perception of the business
- Leasing has balance sheet benefits. You may be able to exclude some leased resources and related obligations from your balance sheet. Such moves might improve financial indicators such as your firm’s debt-to-equity ratio or earnings-to-fixed-assets ratio. Bear in mind, however, that accounting rules do require your balance sheet to report assets leased under certain types of agreements.
If you do decide to lease resources, keep the term short – two years is ideal. Try to negotiate a “modern equipment substitution clause” that lets you update or exchange your resources so you don’t end up paying for obsolete technology. Also, insist upon a cancellation clause that lets you pay a fee to cancel the lease. Note the cost of any cancellation penalty.
Last but not least, if you think you might want to purchase the asset after the term of the lease has ended, look for a lessor that offers an option to buy. It is usually advantageous to secure the services of an equipment leasing broker who knows the proper structure to fit your company’s needs.
Alright thats about “Leasing”….see you again later with more interesting articles and news…