Agricultural Equipment Leasing
With the rising cost of agricultural equipment, the farmer probably wishes that cash could be grown as fast. There is a way to increase cash flow and lower equipment expenses at the same time. It's a true agriculturally based plan; growing cash instead of scrambling to find it. How is this possible? The answer is agricultural equipment leasing.
Equipment Leasing Improves Cash Flow
Eighty percent of farming companies take advantage of leasing all or some of their mechanized equipment. Leasing is the method that enables companies to offset the high costs of agricultural equipment financing. The immediate result is improved cash flow, and the longer-term benefit to the company is a reduction in its financing costs. Leasing is a plan that enables a constructive plan for the frequency of borrowing money to finance operations. The economy works best for the company when the company maintains a strong cash position. In an economy where customers are delaying payment of invoices, and vendors are having trouble getting paid, a good cash position saves the company a lot of non-productive effort and a few headaches.
The Right Agricultural Leasing Company Helps to Protect Against Obsolescence
Obsolescence is a constant worry because it's a daily progression in the farm equipment business, and purchasing equipment unavoidably brings the high costs of obsolescence to the deal. Equipment obsolescence is often the unknown and unplanned killer of company profits. When a company buys a piece of equipment that is a "lemon" they will always be aware of the unavoidable high costs of equipment they might own for years. Leased equipment can be turned in for the latest model, and the farmer does not have to worry about selling the equipment. A company that bought the equipment is literally stuck with it, and the farmer is free of all of the ongoing maintenance and repair expenses for years beyond a lease term.
Equipment Leasing has Tax Benefits and Improves Flexibility & Efficiency
The benefits of farm equipment leasing extend beyond protecting against the high costs of obsolescence, because it also provides the benefit of reducing taxes. Improving a company's ability to respond to an ever changing market by easily changing equipment is an option that companies need. To do so without having to find a buyer, or being concerned about the equipment's resale value makes the process easier and cost-efficient. Upgrading equipment is a much more difficult process when agricultural equipment financing was used to make these purchases. Office equipment can also be leased under the right conditions.
A company reduces its financing costs while improving its cash flow position when leasing equipment. Leasing is the best protection against obsolescence costs while providing a company with the financial flexibility to upgrade their existing equipment without the delay of first having to sell equipment. The odds are good than when a company adds up its lease payments, and deducts its tax savings, the residual cost of the equipment over the lease period will be less than if the company purchased the equipment and attempted to sell it when a lease would have ended.