Your business venture will often take you in all sorts of different directions and you have to quickly adapt to those changes by making sure you have the right equipment and staffing levels to get the job done.
When it comes to acquiring access to the right technology and equipment you need it can be a real challenge to your cash flow if you pay upfront for something, plus there is the issue that your tech can soon become outdated.
This is one of the fundamental reasons why you have to decide whether it is better to lease or buy certain items of equipment.
Here is a quick overview of whether it pays to look at computer and iPhone rental, for example, or commit your company cash to buying the equipment you need outright.
Good for cash flow
One of the most obvious advantages of leasing is that you don’t have to find a large amount of capital upfront, which you would have to do if you were buying an item outright which helps you improve cash flow.
Leasing equipment will involve paying a deposit and monthly payments and the total cost can often work out less than if you pay cash and buy the item outright.
With leasing, you don’t own the item and hand it back at the end of the term, but at least you get the chance to upgrade to new technology quicker and easier than if you had to try and sell what you own to raise cash.
Make your business more adaptable to change
There are so many scenarios you can plan for in business and another consideration when it comes to leasing equipment is that it does allow a greater level of flexibility to meet the demands of your business more efficiently.
If you need extra equipment to fulfill a job or have to have a specific item now that you are not sure you will need so much in the future, these are the sort of situations where leasing makes sense.
If you buy outright you might be stuck with an item you find you don’t need in the future, whereas leasing equipment gives you more flexibility and maneuverability to adapt to changing demands.
Weighing up the cost
It is always a good idea to get a professional opinion from someone who can point out the financial pros and cons of leasing compared to buying outright, such as the potential tax breaks you might enjoy with either option.
It is also worth bearing in mind that you will be paying interest on your lease agreement, which you wouldn’t be doing if you bought the item outright.
However, the obvious downside to buying outright is the chunk of cash that you will be taking out of your business to pay for equipment.
It might actually work out better for your cash flow to pay interest and lease the item and at least you still have the financial strength of cash reserves to be able to meet your next business challenge.
When it comes to leasing tech equipment, in particular, you might decide that leasing could be the better option as it not only keeps your cash flow intact but you won’t have to worry about being stuck with items that become outdated, which can happen when you consider the pace of technology and innovations.
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