The Benefits of  the Lease Plan

What are the benefits of equipment leasing? well on a typical journey to work, you will see over a billion pounds worth of equipment on leasing or finance, cars, trucks, machinery, planes, trains almost everything you see will be leased or financed. All of those companies have differing reasons why they are using equipment leasing, here are the main reasons why equipment leasing is so popular.

 Most leasing companies will simply start by listing all of the normal benefits of equipment leasing  that are on every website on the web. Furthermore, they rarely explain in normal, jargon free language. We hope that we have made it very easy and clear to fully understand what are the benefits of our lease plan.

Gives you a rainy day fund.

The key benefit of equipment leasing is that it will preserve your cash in your company. Every company needs what we call a  rainy day” fund, to cover the unexpected bills that suddenly crop up from nowhere.

You know the sort of thing, a van engine suddenly needs replacing,  money needed to purchase new materials for a  new customer who will help you grow your business.  We cannot stress hard enough that cash flow is crucial to any business, and a cash rainy day fund simply gives you flexibility to cover unexpected day to day expenses. Remember the key phrase in any business, Cash is King

Avoids the bank manager.

Very few people actually enjoy speaking to your bank manger, there is always a certain air of trepidation. Will he ask for extra security to cover the loan or overdraft before he might consider. Will he ask for updated management and budget figures?  The terms that banks offer loans are a major obstacle to companies looking for finance from their banks.

When you ask the bank manger if you can include installation, transport, etc,  you will hear the phrase that is very well known, ” computer says No”. With our lease plan, well you can guess what the answer will be!

It will free your bank credit line for other uses, perhaps the need to employ extra staff, or sudden cashflow fluctuations.

The lease plan will run for the period of the lease, as long as you make the normal and agreed repayments every month. You can plan your  future with the confidence of a fixed monthly repayment and rates are still at historic lows.

Everyone’s reason is different.

If you asked companies that use leasing, they will come up with many different reasons why they chose equipment leasing, could be cash flow, might be a rainy day fund, they might require their cash to fund other equipment. New starts need to save their cash, established companies might say, it is the tax benefits. It simply is up to you, but remember no one pays their staff 3 years in advance.  Therefore, let the equipment work for you and generate the profit by spreading the cost, it really is a no brainer!

What equipment can I lease?

Banks are quite particular when it comes to lending, if it is painted yellow, or has a wheel at each corner, they will normally say yes.  If you tell the bank it is funding for a commercial kitchen with air conditioning.  Also add that ducting and  installation costs are involved.   You could well hear a sharp intake of breath! Equipment leasing gives you the total flexibility of  choice of equipment, and what else that you want to be  added  onto your  lease agreement.

As you are not outlaying a capital sum, but a monthly repayment, this normally helps in in acquiring perhaps better or more efficient equipment that you would have been able to afford with a cash purchase.  In fact if you look at what we have leased over the years, you can see that  it can be used for almost any piece of equipment that you can think off, from plant, machinery, furniture, air conditioning shoplifting, North Sea equipment, football pitches, renewables, the list is almost endless!

Overplaying the tax side?

Almost all leasing companies will proudly show you potential tax savings by using equipment leasing.  The key word is potential. Remember in all of these is that you have to be making taxable profits to gain the tax benefits.  Look upon this as a probable benefit , not a cast iron one in your cash flows.  Very few start up companies will be making large taxable profits in year one! If you do, well congratulations!  Established companies making taxable profits are normally fully aware and utilise the tax benefits to their advantage.

Always have suitable equipment

Leasing will give the the opportunity to “upgrade” your equipment during the term of the lease. Especially with IT equipment, you can change the equipment during the lease term. You are no longer not stuck with old, and unsuitable equipment for your growing company. This just adds to the junk cupboard.

But if I pay cash, it is mine!

That is true, but if you really think about it, do you need to actually own the equipment. If you look around you, how much old equipment is still in storage in your company. Probably you have old computers, fax machines, obsolete machinery or other equipment that you will never use again. Just clutter. If you really need to own equipment, finance is a very good option, and you have spread the cost.

A thought for you, in 2017,  LeaseEurope, (Finance & Leasing Association for Europe) members confirmed that over €802 billion was provided to European  businesses and customers. In anyones terms, that is a shed loan of money! They cannot all be wrong can they?

So there you have it!

In  “jargon free ” language, you now know why businesses choose equipment leasing, and we hope this answers your question, what are the benefits of  equipment leasing.  Oak is transparent, impartial and experienced, coupled with thousands of happy customers, millions funded.