Use Equipment Leasing to Conserve Cash

Every business must generate a profit to survive. Even profitable companies must, however, be concerned about cash as much as profits. It is a simply reality of business that cash is the fuel that keeps companies running. If you are managing a growing business, cash is even more of a concern. This is because growth in a business consumes cash.

Equipment Leasing

Protecting Your Cash

With the importance of cash to operations, an effective manager will use a number of methods to conserve cash. One of the most effective cash management strategies includes using equipment leasing. The purchase of equipment can require cash to be sunk into down payments and high monthly payments. If adequate credit is not available, the equipment can require outright purchase. This takes even more cash out of the company.

The Power of Equipment Leasing

An effective and cash conserving approach is to avoid capital expenditures on equipment. Use of equipment leasing can make that possible. When equipment is leased, it is often its own collateral and doesn't impact a company's credit line. In fact, prudent use of leasing can improve the credit score of a business. Additionally, leases are designed to avoid large upfront cash payments. Monthly payments on leases are usually lower than purchases, adding more cash savings.

When equipment leasing is utilized, the leasing company will often provide favorable terms for upgrading and replacing equipment on lease. This can make your business more efficient and avoid the maintenance of older company owned equipment.

The benefits of leasing can be supported by the fact that even large corporations are frequent users of leasing as a financing alternative. Many of the vehicles and much of the machinery you see used by the largest companies are leased from a third party.

If your company plans a large investment in equipment, leasing may well be a better alternative to consider.

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