What is business leasing? The benefits at a glance!
With business leasing, entrepreneurs get the chance to finance assets without having to make a large capital investment. This can range from trucks to equipment. In this article, we will answer the question what is business leasing and discuss its benefits.
What does business leasing entail?
In the case of business leasing, a leasing company enters into an agreement with a company to finance an asset. Leases come in several options, where you either use or own the asset. The main advantage of doing business with a leasing company as a company is spreading the costs over a longer period. You now don’t pay all in 1, but a fixed amount per month.
ADVANTAGES OF BUSINESS LEASING
All-in lease rate: With business leasing, you don’t have to worry about separate cost items such as repairs, maintenance, insurance, road tax and tyres. All these costs are included in a fixed all-in rate paid monthly, ensuring transparency and ease in budgeting.
No risks: With leasing, you run no financial risks. Any unexpected costs for repairs or maintenance are covered, and you don’t have to worry about the residual value of the asset.
DIFFERENT FORMS OF BUSINESS LEASING
There are two main types of business leasing:
Operating lease: The leasing company owns the asset, you lease it from them. You pay a monthly rental fee and can add extra services, such as maintenance and insurance. When the lease period ends, you can return the asset or buy it at market value, provided no price has been set beforehand.
Financial leasing: In financial leasing, you own the asset yourself. The leasing company buys it for you and you pay them back in instalments. With this form of leasing, you own it yourself, which does carry additional risks. This option is therefore cheaper than operational leasing because of the risk.
SUMMARY
Leasing has numerous advantages for businesses, including maintaining working capital, professional advice from the leasing company and flexibility in financing options. Leasing allows companies to use expensive business models without losing a big chunk of money right away. Consider this option if you want to maintain financial flexibility while still being able to invest in essential business assets.
