The best equipment financing option in Canada continues to be equipment leasing as a great way to maximize cash flow and over all cost effectiveness for new asset acquisitions. The other significant advantage of a lease equipment strategy is the ability of this type of financing to gain financing creativity based on the needs of your Canadian firm. In Canada corporations of all size, including the government by the way, utilize leasing as a financing option.
Is there any asset that can’t be financed? For years we have half jokingly told clients that anything can be financed, and quite frankly, based on your firms overall credit structure and quality, we believe that to be very true.
Many business owners don’t often realize that even ‘intangible ‘assets can be financed, such as software, installation costs, maintenance contracts for your financed asset, etc.
The whole issue of equipment leasing for Canadian asset acquisitions quite frankly revolves around the ‘ right ‘ lease, and, as importantly, your leasing firm partnership. Properly structured leases create a win / win scenario for all parties to the lease – namely the equipment vendor or manufacturer, your firm, and of course the lease finance company.
We are often somewhat disappointed when clients are only focusing on ‘rate ‘, because in a large number of cases overall lease amount approval, structure of lease, and type of lease chosen have significantly more importance that the ‘rate ‘. ‘What’s my rate ‘is not an effective way, we believe, to enter into a lease negotiation. Naturally having said that, a rate must be commensurate with your overall credit quality – as credit quality, combined with the asset collateral, drives the final rate decision.
A quick recap of the generic benefits of leasing should emphasize the advantages of this type of asset acquisition financing. Those benefits are:
– ability to acquire equipment while minimizing your cash outflow for asset purchases
– cash flows match the benefits and useful life of the asset you are acquiring
– potential tax and balance sheet advantages
– ability to upgrade equipment and stay ahead of the competitive curve based on your ability to acquire items that you might not necessarily be able to purchase on a cash basis
Equipment leasing often tends to also be 100% financing – that’s a great way to maximize cash flow, and, as we noted, many Canadian business owners and financial managers are often surprised to know that lease financing can include tangibles, as well as those maintenance and upgrade costs depending on the asset you are financing – hint – ‘ think computers ‘!
There are a number of tools that allow you to evaluate lease financing options, one of which is a ‘lease calculator ‘or’ lease vs. buy calculator’. These are widely found on the internet.