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Everything You Need To Know About Construction Equipment Leasing...And How To Get It!
By Con Quimpe
As a decision-maker in the industry, weighing all equipment acquisition options is a critical aspect of the job - especially given today's fluid marketplace.
With equipment leasing you don't have to worry about the overhead of the purchase while keeping your cash accessible. No matter how big or small your project you can always find leasing options from the financial institutions who specialise in this type of product. Plus, payments you make under an operating lease are tax deductible.
65% of the top businesses lease equipment, according to an ELA survey. The top reasons these businesses cite for leasing include consistent expenses in budget management, increased cash flow, and the ability to have the latest equipment.
As businesses prepare to compete and grow in a new millennium, many are searching for proven new ways to address their equipment financing needs. And the choice for an increasing number in is clear: equipment leasing.
If structured properly, as a "true" lease, equipment leasing has some very important tax benefits. The payments can be considered a rental resulting in a 100% expense write-off. At the end of the year you would simply total your payments and deduct them entirely as an expense. This is a much more rapid write-off than interest
expense and depreciation.
Most leases do not have to be shown on your financial statement as a liability, since theoretically it is a contingent liability, and only has to be shown as a footnote. This keeps your financial statement from becoming overloaded with debt and is important if your bank lines require maintaining certain ratios.
The biggest benefit, however, is that you can get the most money with the least information.... Up to approx. $100,000 with a single page application!
For many in equipment leasing makes perfect sense. Especially when you consider the upside: Leasing allows you to keep your machine stock flexible. When your work changes, your machines can too.
It provides a planned schedule for equipment replacement, helping you run newer, up-to-date equipment so you'll have less downtime. It generally requires smaller amounts of money up front and monthly payments on your equipment leasing are generally lower than installment payments, thus freeing up cash and increasing the liquidity of your assets. And it doesn't lock you into a long-term commitment to purchase.
It would therefore be wise for any business executive to investigate the advantages to equipment leasing in order to make the best use of current financial resources.
Con Quimper has worked in the construction equipment industry and academia in South and Central America since 1986. His teaching and research interests focus on construction equipment, contract administration, and contract dispute resolution. He is a consultant to various companies in these areas. Visit his information website at: www.constrution-equipment.info
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