Equipment Leasing company of Australia - Grenke
Equipment Leasing - An overview
These days business houses have become more conscious about cash inflows and the necessity of buying and owning office equipments. Earlier starting an office means buying all the equipments, including the furniture required in the office from different vendors depending on the capacity of each business.
But the current business have started evolving in such a way that both micro and macro requirements of a business is thoroughly examined to bring out the best, which can in turn offer revenue to the company. Another reason is depreciation in the value of equipments. The equipments you buy today will not have the same value after five years. So there is the depreciation in the value of the equipments that is not going to benefit the business in any way. With the passing of years the wear and tear of the equipment adds extra cost to the company as maintenance fee.
What is equipment leasing?
Many companies have started thinking about Equipment Leasing as it is going to bring benefits in the long term. Equipment leasing is a type of loan, where lender will buy equipments and then lease it to businesses at a flat monthly rate. Here the leaser have to select a term period for an agreed monthly rate. When the term period ends the business house will get two options. It can either extend the term period for an agreed monthly rate , or can return the leased equipment. All types of equipment leasing is based on a lease contract agreement.
Why do you go for equipment leasing?
Those companies that are still following orthodox ways of processes and procedures will have this question with them. One has to get a proper insight in this matter to check the pros and cons of leasing.
Let us take an example : There are two companies - > Company A and Company B.
Both the companies are going to open new offices in their locality.
The company A management decides to buy all office equipments by themselves. They have started searching for vendors for buying each type of equipment. And have also started finalizing the deals.
On the other hand, the company B management is planning to go with office equipment leasing. They have started searching for a lessor with whom they can have a good rapport and support. The company B’s plan is to take almost all the office equipments required for their new office for lease for a term period of 10 years.
Now, we have to assume that the company A spends nearly $500,000 for buying office equipments, including computer equipments, computer software and office supplies. Meanwhile, the company B spends $18,000 as lease amount for office equipments. In the long term who is going to get the benefit?
I will say it is company B that will be benefited with the office equipment deal. As company B is not using the capital all at a time they are able to infuse the capital into projects that are able to bring business and revenue. Moreover, monthly payments are able to reduce the burden of making all payments at a time.
In the case of company A, the equipments bought by them can be used by them for long time. But each year the value of the equipments are decreasing in a drastically low level. Again, the burden of one time payment settlement will be hurting the company's cash-flow. When the company has to raise cash on any immediate project, and are searching for a payment option then the cash they spend on office equipments is going to become a burden.
2016 Leasing Equipment Demand Index among Australian Organisations:-
>Leasing of Operations 25%
>On the spot Buying 18%
>Finance Leasing 12%
>Bank Borrowings 5.5%
>Rent 5.2%
Pros of Equipment Leasing
Cost Control - By equipment leasing it is becoming easy for companies to pay the lease payments without affecting the overall cash flow.
Flexible accounting - It is easy to maintain operation cost on a monthly basis. There is flexibility in accounting.
Removal of Maintenance burden - Life of equipments decrease as time passes. Most of the equipments have to be taken to maintenance department for any type of repair.
Asset Redundancy - When life of an equipment ends it has to be disposed. And in all most all cases the value of the old equipment is almost very very less. Thus a company that buys and disposes equipment is not at all benefited much from it.
Cons of Equipment Leasing
Long lease terms - Most of the companies enter lease agreement for a long term. At times some companies have the problem of paying the amount on a monthly basis.
More complications - The companies that are not running in profit may have issues with lease payments.
Why do you approach Grenke?
The company is a top leader in Finance leasing, IT leasing and Equipment leasing services. Its their years of experience in the leasing field that assists customers in beginning new lease term agreements with the company within no time. It’s their simple, fast and personal approach that makes the company an ever approaching organisation in the industry.
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