|
 The amount of equipment that is financed by leasing continues to grow. In fact, a staggering $600 billion of total investment in 2006 was originated in this manner. A major segment in our economy that is dependent on leasing programs is the telecommunications industry. One of the chief reasons companies lease this type of equipment is to diminish the devastating effects of obsolescence.
Leasing offers many advantages over an outright purchase. Tax deductibility, balance sheet management, flexibility, and improved cash flow are all good reasons to consider equipment leasing. Financing telecommunications equipment by leasing is especially favorable because of the ability to easily upgrade to better technology. Consider a scenario where your company needed new telecommunications equipment, but decided to go to the bank for a loan. You get approved for loan in which you make payments for five years. Within three years, technological breakthroughs have resulted in greater efficiency and speed in this segment. You're stuck paying on a loan for equipment that is outdated. Meanwhile, your competitors are grabbing your market share because they are able to process information and resources in a much more timely and expeditious manner.
Had you chosen to lease the equipment, it would have been a different outcome. Leasing allows you to easily upgrade your equipment to a state-of-the-art level. Most lease contracts have a clause that deals with upgrades. If there is not such a clause that does not clearly give you this important option, I recommend that you insist that it be added. The risk of obsolescence is greatly diminished and you will be able to keep up with the competition.
A good case study is the plight of a collection agency in the Midwest. They bought a $200,000 dialer a few years ago which was financed by a loan with a 20% down payment. Investing in the dialer was smart because collector productivity was greatly enhanced and the firm's profits doubled. Within a few years, however, a much better model was introduced to the marketplace and included a leasing option. The company's main competitor bought this new product and was able to lure customers away. Had they financed the original dialer with an equipment lease, they could have easily upgraded to the new model, and maintained their customer base.
The advantages of leasing equipment are numerous. When you've made the decision to purchase much-needed telecommunications equipment, it is advisable to contact a professional lease broker for guidance. A properly trained broker knows which leasing company will offer the best fit for your needs and work to gain your company the optimum flexibility and rates.
Need equipment financing? Click here to apply or call us at 417.849.7394
|
