Thursday, November 1, 2012

Hows Your Business Financing Lease or Buy Expertise? Assessing Your Lease Financing Options

Analyzing Business Asset Acquisition Alternatives OVERVIEW Information on the lease or buy decision that owners face when they employ a lease finance option in their overall business financing strategy

Did you realize that when it comes to Canadian business financing the 'lease or buy ' decision is actually an ' investment ' decision? Let's look at some key aspects of leasing finance that will help you analyze the alternative you might not know you have! While various business assets can be leased, i.e. land, office, etc our focus today is on equipment and assets. The key advantage of leasing these assets is that it allows you to free up scarce capital that you would otherwise spend in other aspects of your company... i.e. daily operations! The challenge though, for the Canadian business owner and financial manager is knowing how long you will hold the asset, and if it will have any value at the end of your usage and

lease term. And because it's a lease, and not a purchase you cant make unilateral decisions to sell the asset or make a dramatic change to it. Your lessor of course has a buy in into that decision, and the reality is they borrowed the money also and have locked in a certain yield they hope to achieve on all your payments. We love talking to clients about the ' lease vs. buy' decision as some are keenly aware of the key drivers in that decision, and others... are not! So what are some of those key drivers? They include the actual cost of the asset, taxes, accounting treatments re book value, as well as making an intelligent decision around what the leasing company calls the ' useful economic life ' of the asset. Cash flow is critical in the business owners final decision around the asset acquisition, but at the same time you want to ensure that you also consider the profit generating aspect of the asset. Many business owners don't fully understand their ' cost of capital ' , and other factors to consider are areas such as debt vs. equity , given that debt is pretty well always cheaper than reducing ownership control via equity dilution . And if your company has a reasonable amount of equity and a clean balance sheet you can achieve very attractive lease costs in todays business financing environment. Not all the lease / buy decisions you are faced with have to do with the numbers . A good example purchasing or leasing new technologies for your employees give your company both a solid reputation and are somewhat of a morale booster. In certain cases because of government legislation you may even be forced to lease or purchase assets you might not necessarily have wanted to... or needed. Thats our governments for you... here to help ..!?! Clearly good its always good to focus more so on revenue producing assets, and in particular ones that produce sales and profits. On occasion though the business owner finds himself or herself faced with the proverbial guesstimate when it comes to business asset acquisition. So can we summarize some of the critical factors in the leasing or purchase decision? They might include: Revenue and cost issues Tax/accounting/depreciation/useful life issues Budget constraints Intangible issues re customer and employee perceptions If youre not totally comfortable with acquiring assets under a lease / loan or purchase strategy seek out and speak to a trusted, credible and experienced Canadian business

financing advisor today.

7 PARK AVENUE FINANCIAL CANADIAN LEASE FINANCE EXPERTISE

Stan Prokop - founder of 7 Park Avenue Financial http://www.7parkavenuefinancial.com Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing. Info re: Canadian business financing & contact details :
http://www.7parkavenuefinancial.com/business_financing_lease_or_buy_leasing_finance.ht ml