Most Canadian owners and business managers don’t think of always paying cash for equipment and other capital acquisition needs. They also can’t imagine, in the current economic climate, paying cash for everything. Whether you are in a industry that is highly capital intensive, or if you only on occasion need to upgrade or purchase new equipment the leasing of equipment should be considered as an effective overall financing strategy for your company
Naturally no form of business financing in Canada could be considered perfect and met absolutely every one of your needs, but let’s examine what are considered to be normally the top four benefits of equipment leasing. Naturally you want to ensure you are dealing with the right type of lease firm and you have also carefully examined your rights and obligations under the business lease.
Anyway, benefit 1. Flexibility. The reality is that working with the right lease partner firm should provide you with the flexibility you want in your transaction. Flexibility is of course a broad term, but we are basically referring to the type of lease that works best – for your firm! Not everyone else’s. That flexibility comes in the form of low or no down payment, monthly payment structuring options ( here are possibilities abound!), balance sheet optics around the amount of debt you can carry without getting your bank offside. Flexibility also comes in the form of the ability to return the equipment or extend the lease for a pre agreed period of time.
Benefit # 2 might well be called Cost efficient. The last thing you want to be doing is getting your firm locked into a long term lease on a depreciating asset – and the reason you lease financed the equipment in the first place is that you as a Canadian business owner and financial manager recognize that the equipment ultimately will probably have no value after its economic life is completed.
If the business world was slow-moving and predicable you would never have to worry about competition, changing technology, etc.- however things don’t work that way and as your needs change over time you can using equipment financing as the tool to address those needs.
Benefit 3- Tax benefits! We hates getting into long accounting and financial statement dissertations when we are lease financing info with clients, but the reality is that leasing of equipment as a business finance strategy has accounting and tax benefits re write off plans around your payments.
Our final focused major benefit is simply Cash flow conservation. It’s tough enough in today’s business environment to achieve positive working capital and cash flow for daily and long term needs. Utilizing lease financing as a tool to minimize cash outlay and reduced down payment requirements makes total sense. Choosing an off balance sheet operating lease strategy will also ensure your ratios, and debt covenants stay intact.
In summary, as we stated, no overall business financing strategy works perfectly for all companies in all industries. But leasing of equipment has significant benefits that outweigh other options such as purchasing for cash, entering into long term loans, etc.
Speak to a trusted, credible and experienced lease financing advisor to ensure you can take advantages of the four key benefits we outlined.
Positive Beliefs About Money, Good Personal Finance Strategies And How To Use Them
What is Financial Healing?
To me financial healing works on two levels. Firstly and most importantly there’s the level of changing your beliefs.
Work On Your Negative Money Beliefs
Beliefs about money and finances have a huge impact on your ability to save money rather than spend it.
I liken negative money beliefs to what I call ‘mind viruses.’ If you have a mind virus, it’s like your PC – no new programs you add, no matter how good they are will increase the performance of your PC,
So if people are not in the financial position they want to be, there are some mind viruses present, and we need to remove those viruses – in our case our negative money beliefs.
So when we undertake financial healing, we’re getting rid of the viruses. And this involves looking at people’s attitudes and beliefs about money and about themselves and changing these beliefs. So we’re getting rid of the negatives and re-imprinting our mind with positives.
Practical Money Saving Strategies
Secondly there’s also the practical side as to what to do with the money – how you can save money rather than spend it all.
Sometimes the savings are subtle. For example my background is in financial services and therefore I know that when people have taken out policies to pay out life assurance a while ago, they may well be able to get that policy cheaper now.
Life Assurance Premiums May Be Cheaper Now
This is because of two factors. Firstly the market is more competitive these days, and secondly there have been great advances in medicine. So if you have a certain medical condition, it may not now be rated as highly and hence the policy premiums will be lower.
For example, things like AIDS didn’t quite have the impact that we possibly thought it might have in the late 1980s. And as a result premiums have dropped, so there are various ways of saving money now.
To outline another life assurance example – cover you purchased that was relevant at the time – maybe to protect a mortgage or when you had a young family – may not be relevant now because the children have grown up and moved on.
So your level of life assurance may now not be necessary, and you may be able to substantially reduce your outgoings.
So there may be ways of getting reduced levels of cover that meet your current requirements but will save you money on a monthly basis. It’s always best to explore this in association with a financial advisor that you know and trust.
Financial Healing Summary
Firstly you need to remove any limiting beliefs about money and finance that are preventing you from saving money for your future. This will prevent new, useful personal finance strategies being sabotaged.
Secondly, you need good advice on your current spending to check that it meets your lifestyle needs currently. In our two examples, we spoke about life assurance premiums, but you also need to audit all your regular spending areas.
