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Month: August 2009

Leasing Business Equipment Offers Advantages

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In a cash-strapped business climate, buying new business equipment often falls to the bottom of the to-buy list for many small businesses. Yet, it doesn’t have to.

You can still get the new equipment you need to grow your business by leasing new office equipment.

Leasing new business equipment is a savvy business move for many small businesses. More than 80 percent of all businesses lease some or all of their equipment, according to the U.S. Department of Commerce’s Bureau of Economic Analysis.

What does that mean for your small business? The opportunity to grow your business with new equipment while freeing up cash flow.  Many businesses turn to leasing not because they are short on cash, but because they understand how leasing is used as part of a successful cash flow plan.

The Advantages Of Leasing

What types of businesses lease business equipment? All types, including industrial companies, commercial printers, hospitals and medical firms. 

Leasing offers entrepreneurs the opportunity to afford more business equipment than your firm might be able to buy outright; even if you could buy it outright, why tie up your cash — not to mention the depreciation — that comes with buying new equipment?

From copy machines and computers to delivery trucks and construction equipment, many businesses find that equipment leasing is a smart alternative that allows them to buy new equipment with as little cash outlay as possible.

Leasing business equipment makes financial sense. The equipment you buy today at top dollar may not be nearly as valuable in a few years. It’s why many technology companies, especially in communications or computers, opt to lease equipment to avoid debt for machines that will be outdated by the time they’re paid off.

If you have questions about business equipment leasing and how it can benefit your business, contact MDS Funding at 866-394-4637, go to http://www.mdsfunding.com or email CashFlowConsultants@mdsfunding.com.

The Basics Of Equipment Leasing

There are many advantages to equipment leasing, especially if your business  needs equipment right away or is concerned about maintenance costs.

The Equipment Leasing and Finance Association (ELFA) in Arlington, Virginia, lists these benefits:

  • Equipment leases are treated as tax-deductible business expenses. You can deduct the costs of leasing equipment because you (leasee) make monthly payments to the owner (lessor) for equipment they bought or already own.
  • Equipment leases are often approved quicker than traditional loans and involve less paperwork and fewer credit restrictions. You don’t have to wait weeks for bank approval, nor do you have to show countless documents. Your lessor may also offer lease financing.
  • Equipment leasing offers lower maintenance costs. It is particularly advantageous for companies to lease equipment that they don’t maintain. It frees companies up to concentrate on their core specialities instead of worrying about equipment maintenance.

Equipment leasing is an affordable solution to companies’ equipment needs. It is a popular alternative:  U.S. businesses, non-profits and government agencies spend more than $1 trillion on capital goods and software (excluding real estate) every year.

The equipment financing industry is a $600 billion a year business, financing equpment through loans, leases and other financial vehicles, according to the ELFA. 

Equipment finance companies also finance the export of U.S. manufactured products internationally.

For more information about equipment leasing, visit MDS Funding at www.MDSFunding.com, contact MDS Funding at 866-394-4637 or email CashFlowConsultants@mdsfunding.com.

Financing Purchase Orders With Factoring

Your company has just landed a large government contract.

Now what? If you’re like most small businesses, you might think that a large  contract with a state or federal agency could be the answer to your prayers.

But it could be an absolute nightmare, if you don’t have the capital to cover purchase orders and materials needed to fulfill the contract. They’re costs that many small businesses with limited access to capital can’t afford.

The solution: Purchase Order (PO) Funding, short-term financing that
provides 100% of your supplier’s cost to fill orders from credit -worthy customers.

Here’s how it works: When a manufacturing company receives a $1 million order, it may cost $400,000 in materials to fill the order.

Purchase order funders (factors) advance the funds necessary to fill
the order with a direct payment to your supplier or a Letter of Credit on your firm’s behalf.

Factoring begins when your customer’s purchase order is filled and your invoice for payment is submitted. Factors deduct the costs for your purchase order and fees when the customer sends payment. You keep the balance.

THE BOTTOM LINE: You can promptly fill your purchase orders, get profit and prevent loss of  future orders with factoring.

Several companies are ideal candidates for factoring:

  • Companies that drop ship products from suppliers to credit-worthy customers, or who have either light assembly or repackaging before final shipment.
  • Companies that need a minimum of $50,000 in financing.
  • Companies that are distributors or resellers of finished goods, such as retailers.
  • Companies with gross profit margins greater than 10%.

For more information about how factoring can help your business, visit MDS Funding at www.MDSFunding.com, contact MDS Funding at 866-394-4637 or email CashFlowConsultants@mdsfunding.com.

Lifestyle Leasing Offers Cheaper Solutions To Equipment Needs

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That state-of-the-art computer system you bought for your office a year ago? It’s probably already outdated, thanks to the rapid pace of technology.

Computer manufacturers debut new, improved models so quickly that by the time your purchase is paid off, they’re already out-of-date.

There is a solution: Lifecycle leasing.

Lifecycle leasing allows you to buy the latest equipment — usually computers or communication devices — using a series of short-term leases. 

The advantage? Cost savings.

Leasing equipment typically costs less than if you replaced the equipment every one to two years. Plus, lifecycle leasing  allows you to upgrade  to new equipment.

Here are a few tips to consider with lifecycle leasing:

  • Length of lease — Set up short-term leases that won’t extend far into the lifespan of the equipment you’re leasing. For example, you wouldn’t lease a computer for six years, because it would be obsolete by then.
  • Up-front payment — Reduce the amount of downpayment by spreading it out over the length of the lease.
  • Depreciation — Equipment that quickly loses its value should be have a short-term lease, with provisions that allow you to upgrade.
  • Tax liability — Depreciation can be used to limit tax liability. Consult a licensed CPA on tax issues.
  • Purchase option — Negotiate terms that allow you to buy the equipment at a fixed price at the end of the lease.

For more information about how lifecycle leasing can help your business, visit MDS Funding at www.MDSFunding.com, contact MDS Funding at 866-394-4637 or email CashFlowConsultants@mdsfunding.com. Photo provided by freedigitalphotosnet.