YOUR COMPANY IS LOOKING FOR LEASING SOLUTIONS!
EQUIPMENT FINANCING SOLUTIONS YOU CAN ACCESS TODAY
You've arrived at the right address! Welcome to 7 Park Avenue Financial
Financing & Cash flow are the biggest issues facing business today
ARE YOU UNAWARE OR DISSATISFIED WITH YOUR CURRENT BUSINESS FINANCING OPTIONS?
CALL NOW - DIRECT LINE - 416 319 5769 - Let's talk or arrange a meeting to discuss your needs
EMAIL - sprokop@7parkavenuefinancial.com
Are there some ' deadly sins ' Canadian business owners and financial managers can make when it comes to lease financing in Canada? We think there are a good handful of them, at least 4, so let’s cove those off. More importantly, let’s talk about avoiding them and using business equipment leasing as a solid tool to help finance your business.
DON'T COMMIT THESE 4 SINS IN ASSET ACQUISITION LEASES AND LOANS
So, what are those 4 key areas of potential ' sins' when it comes down to that asset acquisition decision? For us it comes down to:
1. Entering into the wrong type of equipment leases / loan
2.Mistakenly purchasing the asset that in effect depreciates while at the same time providing your firm with certain benefits over a period of time
3. Entering into a term loan for the asset
And finally...
4.Working with the wrong lease finance firm
AVOIDING MISTAKES IN CANADIAN EQUIPMENT LEASES
The good news is that there are some great solutions to avoiding today’s ' sins '. A good place to start is spending some real time around both the costs and payments involved in your transaction, as well as any balance sheet and tax type issues that you might need to consider, if not now .. down the road!
FOCUS ON CASH OUTFLOWS AND CASH CONSERVATION
The timing of cash outflows on your lease, versus the expected benefits, is a key area to focus on. This is a classic way of weighing the alternatives to equipment leases . This analysis offers proof you are making the right decision!
Let's use a typical example, which in today’s case will be the acquisition of a computer, or a whole computer system, as well as all the related costs that come with that, i.e. software, maintenance, etc. That's an area of our businesses where real cash outlays are required these days!
So what must be considered in our example? Naturally, the actual cost is a factor. We have often said that using a financing mechanism such as asset finance in your business in effect helps you to remove what a dear friend of ours called ' the obstacle to innovation ‘. So just your ability to buy the best and the most with your dollars is one great way to ensure you're not committing one of today’s ' deadly sins '.
CONSIDER THESE OFTEN OVERLOOKED FACTORS IN EQUIPMENT FINANCE
Other factors you should consider are the depreciation and obsolescence that comes with an asset such as this ... (or any other asset for that matter ... in truth, some assets depreciate quicker than others - a cement truck can be leased of financed for ten years). Note to reader: We don't recommend financing computers and related equipment over a ten year period!!
WHAT TYPE OF LEASE IS BEST FOR YOUR FIRM - CAPITAL OR OPERATING?
Another key point is to ensure that the type of lease and lease term you enter into covers off what the leasing companies in Canada call the residual value or end of the term. Bottom line - focus on what you intend to do with the asset at the end of the lease term... is there some value still? If the asset can be replaced, upgraded, or still utilized it might be beneficial to enter into an operating lease versus a lease to own type scenario.
Your firm might also consider a business loan for asset acquisition although that strategy often consumes line of credit and business credit availability which might be better used for funding daily business operations. When you purchase the equipment outright with ' cash on hand ' that same business credit available issue arises.
THE LEASE VERSUS BUY QUESTION
There are substantial differences in a loan versus a lease, including areas such as payment of the taxes, down payments required, balance sheet consequences, and credit requirements depending on who you are dealing with.
CONCLUSION
So who can give you a straight answer on what lease is best for you, and when? Cost of equipment and changing technology needs in your business make many industries capital intensive - Resources to address the acquisition of assets include
Independent commercial lease companies,
Captive finance firms,
Bank leasing companies, etc.
THE BEST CHOICE TO ADDRESS LEASING NEEDS ?
A solid decision is to use a Canadian business financing advisor who has strong relationships and knowledge about all of those resources, some of whom have very vested interests to make asset financing work more for them than you.
Click here for the business finance track record of 7 Park Avenue Financial
Stan Prokop
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