Owning your equipment isn’t a prerequisite for accessing top-notch office productivity tools; leasing offers a compelling alternative. Teaming up with the right collaborator allows you to lease precisely the technology your operations demand, tailored to the duration you require.
The benefits are extensive: dependable financial planning, sidestepping capital investments, and an expansive array of equipment selections and configurations, all underpin the merits of leasing.
However, the heart of a lease agreement transcends the agreement itself; it resides in the partner you entrust. Your choice of partner shapes the entire leasing experience. The true value lies in a partner who stands steadfast by your side, taking on accountability, enabling you to dedicate your energy to your tasks, not equipment-related concerns.
LEASING
Why leasing is great?
Throughout the years, many individuals have operated their businesses under the assumption that buying goods outright, regardless of their nature, is the most prudent course of action. Yet, as technology, particularly in the realm of office automation, continues to advance at a rapid pace, the equipment you invest in today might swiftly become outdated within a year. This begs the question: What if future opportunities necessitate immediate financial backing? Can your current cash flow accommodate such needs?
Leasing’s Impact
In 2011, as reported by the Finance Lease Association (FLA), the UK industry successfully obtained nearly £52 billion in credit. This substantial sum played a pivotal role in enabling small and medium-sized enterprises to acquire a wide spectrum of equipment, encompassing items such as office equipment, waste compaction machinery, and various types of plant and machinery. This figure underscores the remarkable efficacy of leasing and underscores why an increasing number of organizations are embracing it as their preferred financial solution for all their equipment procurement needs.
Embracing Financial Evolution
Given the significant transformation of the business environment since 2007, an increasing number of financially savvy and forward-thinking organizations are opting to depart from the traditional practice of immobilizing their capital through direct purchases of goods and equipment. This shift is, in itself, substantial evidence of the changing landscape. Through entering into lease agreements, these organizations discover their enhanced capability to convert Capital Expenditure (CAPEX) into Operational Expenditure (OPEX). This strategic move allows them to preserve funds for unexpected challenges or to capitalize promptly on pivotal business opportunities as soon as they materialize.
Demystifying the Cost Myth
A common misperception that lingers about leasing is its perceived lack of cost-effectiveness. However, this notion couldn’t be further from the truth. Among numerous other advantages, leasing, in fact, stands as a strong contender in straightforward financial terms. The challenge lies in conveying to customers that leasing can undeniably demonstrate its cost-effectiveness credentials.
Leasing’s Transformative Impact Resonates
The transformative impact of leasing has left a lasting resonance. High-ranking executives from various companies, having embraced leasing and witnessed its advantages firsthand, have unequivocally stated that they can’t envision reverting to their previous approaches. This resounding sentiment underscores the profound positive change that leasing has introduced to their operations.
LEASING
What are the benefits of leasing?
Straight away
- Opting for leasing ensures immediate access to your product, regardless of budget constraints.
- This enables everyone to commence using the essential device as swiftly as possible.
Fixed Constuncomplicated and Safe
- Through leasing, you acquire a stable, unchanging cost that remains constant throughout the entire lease duration.
- This grants you peace of mind, free from concerns about fluctuations and uncertainties, as the leasing option is straightforward and reliable.
Flexibility
- Leasing provides you with the freedom to upgrade your equipment at any point during the agreement by simply adjusting the payment arrangement.
Cost Efficient
- Leasing stands out as highly cost-effective. You have the opportunity to fully deduct 100% of the rental expenses from your tax liability, maximizing your tax efficiency.
Benefits
- Leasing serves the long-term interests of your business. While a cash purchase guarantees the acquisition of the necessary product, it falls short in delivering the enduring advantages that leasing can provide.
Equipment
- Opting to lease equipment frequently represents a more tax-advantageous choice compared to an outright purchase of the equipment.
DIFFERENCE
Lease vs Buy
Company A is currently in the process of enhancing its security system, and they are presented with two alternatives: procuring the equipment outright or exploring a leasing solution.
If they opt for the leasing route, Company A can expect to enjoy a substantial tax advantage amounting to £1,289.59, which they wouldn’t have obtained had they pursued a cash purchase. This financial benefit makes leasing an even more attractive option for their security system upgrade.
| Cash Purchase | Lease Rental | ||||
|---|---|---|---|---|---|
| Year | Capital Allowance | Tax Relief | Year | Capital Allowance | Tax Relief |
| 1 | 18% of £7,500 = 1,350 | Less 20% = £270.00 | 1 | 4 Rentals of £817.73 | Less 20% = £654.18 |
| 2 | 18% of £6,150 = 1,107 | Less 20% = £221.40 | 2 | 4 Rentals of £817.73 | Less 20% = £654.18 |
| 3 | 18% of £5,043 = 907 | Less 20% = £181.55 | 3 | 4 Rentals of £817.73 | Less 20% = £654.18 |
| Total Tax relief: £672.95 | Total Tax relief: £1,962.54 | ||||
If we consider cash as the reigning monarch, then cash flow undoubtedly serves as its devoted subject, propelling the engine of any business. However, a moment inevitably arrives when every organization must deploy those financial resources to acquire essential equipment, a move that facilitates competitiveness, growth, and increased profitability.
Leasing offers a practical and cost-effective alternative that empowers businesses to obtain necessary goods precisely when they are needed, instead of being constrained by budget limitations. This approach ensures the agility required to thrive and prosper in the competitive landscape.