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Equipment financing in Canada. Let's discuss when... and why you should utilize business leasing companies for Canadian asset finance.
The motivations behind equipment leasing in Canada vary by client. The reality is, and many don't look at it this way, is that the motivators are actually economic and non-economic, depending on the circumstances within each client. We find that many are surprised to hear that banks and insurance companies utilize lease finance on a very significant basis. Our clients can be forgiven when asking ' why would a Canadian chartered bank, with all the cash in the world (or at least most of it!) consider business leasing companies for their asset acquisitions?
Clearly, it’s a case of non-economic for them, they rely on this method of asset acquisition as a way to address areas such as the ability to control technology for example, in their computing and telecom needs.
The equipment leasing industry in Canada is exceptionally robust and competitive this day. We actually think half the battle knows which firm or advisor will best suit your various needs when it comes to pricing issues, cash flow structuring, accounting and tax implications, etc.
Again, the Canadian business owner and financial manager can be forgiven also for not knowing where to turn to when it comes to the various firms that have specialization in small-ticket transactions, medium-sized deals, and lease financing transactions in the multi-million dollar ranges. It goes without saying that no one firm can be all things to all businesses. That is for sure.
The actual economics of why your firm leases, and when it leases are critical. You have to be in a position to have done, or be willing to do, some analysis on what aspects of equipment financing are most important to your firm. The bottom line? It's that you need to figure out what’s important to your company, whether its cash flow management, payment seasonality, tax benefits, the ability to 'refresh' assets, and in many cases bundle in all sorts of other costs such as delivery, installation, maintenance/support, etc. It is then you are in a position to move forward with your equipment finance strategy.
What are then some of the other key points when it comes to why you should consider working with business leasing companies?
Those other points to consider might be as follows: You want to be in a position to match cash outflows with the useful life of the asset. In telecom and computing that is critical. In other cases, it might be of primary importance to achieve a low lease rate inherent in the transaction - when benchmarked against your own firm's cost of capital this alone is a solid reason to finance via lease.
If you are in a medium-sized or larger firm the way your management is measured might make it a great idea to lease assets, as EBITDA and ROI calculations might factor into your management or owner's compensation criteria. That’s not our favourite, but it's a reality!
New accounting rules in place might make it more difficult these days to achieve true off balance sheet financing - but just the lower rates and monthly payments in an operating lease, plus the ability to return, upgrade or extend alone still make this option feasible and viable for your firm.
So we guess it's all about timing, knowing when and why your firm should utilize equipment financing from Canadian business leasing companies. Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you to achieve maximum use of those 'when' and 'why' criteria.
equipment financing business leasing companies
