| ign="center"> | | | | overlook this strategy. |
| Your firm is looking to finance new equipment or | | | | We mentioned some of the lesser known and |
| potentially to purchase used equipment that still have | | | | perhaps less obvious benefits of lease financing. One |
| value and production capabilities for your Canadian | | | | of those relates strictly to your ability to understand |
| company. What is the best financing option, or is it | | | | your options at the start of the lease. If you find |
| actually better for a firm to pay cash for these | | | | that you might not want to own, or continue to use |
| types of asset acquisitions? | | | | the equipment at the end of the lease term you |
| Certainly outright ownership has its benefits, but at | | | | should opt for what is known as an operating lease. |
| the same time valuable cash resources are drained | | | | This type of lease simply allows you to use the |
| from your business when you buy an asset for cash, | | | | equipment and return it at the end of the lease. But |
| especially an asset that is depreciating in value. For | | | | wait, there is more! In a true operating lease you can |
| that reason the majority of business owners seek | | | | negotiate with the lessor at the end of the lease to |
| out equipment financing / lease financing solutions for | | | | purchase the equipment for its value at that point in |
| capital asset acquisition. | | | | time. (Quite often an appraisal is done so the lessor |
| The obvious benefits of lease financing are touted | | | | and your firm can agree on the value) |
| often - there are other hidden benefits also. One of | | | | Could there actually be even another benefit to the |
| those aforementioned obvious benefits to equipment | | | | transaction we have noted above. Yes, because |
| financing is simply the ability of your firm to save | | | | under a true operating lease your overall payments |
| cash flow and working capital â if cash flow | | | | and actual cost of borrowing will be significantly lower |
| and working capital are ' king ' as they say, then | | | | â sometimes by 10 â 20 %, versus |
| clearly in the challenging business environment of 2010 | | | | if you had chosen a lease to own strategy. |
| they have been re crowned ! | | | | Equipment financing can be complex, and the ability |
| You can further augment your cash flow and | | | | to negotiate a proper rate, term, and structure for |
| working capital by giving consideration to a sale | | | | your firm can be a daunting task. The challenge is |
| leaseback strategy. In this scenario you are | | | | further exacerbated when business owners are not |
| maintaining the use of assets you already own and | | | | knowledgeable enough to relate the pure acquisition |
| have paid for outright â the strategy | | | | to the balance sheet, income statement and other |
| completes itself by your firm selling the equipment | | | | benefits that relate to a properly structured lease. |
| back to a lease company and paying for it over time | | | | We therefore recommend you seek out the |
| again, usually 3 years as an example. Cash proceeds | | | | expertise of an experienced , credible and trusted |
| from the sale of the asset you are using go into | | | | lease financing advisor who can assist you in that |
| your company for working capital needs. Many | | | | regard , often at no charge. |
| business owners and financial managers in Canada | | | | |