Buy, Rent or Lease: The Financial Advantages and Off Book Expenses
While buying equipment outright can have its advantages, there are a lot of reasons to consider renting or leasing equipment as an alternative option. For some, it’s the economic advantage of making smaller regular payments. Others may just need to use equipment for a short time and don’t want to worry about paying big money for something they’ll hardly use.
Renting and leasing can also be structured as an Off Book expense, saving you money and improving the liquidity of your business.
Let’s take a closer look at the different options and their benefits.
Buy, Rent or Lease?
Sure, there are some advantages to buying your assets outright. You own the equipment straight away and don’t need to worry about ongoing payments or interest. But, is buying always the best option?
When you rent or lease an item, you have the option to buy it at the end of the rental or lease period, carry on renting or renewing your contract. So, what’s the difference and how does it affect your finances?
Financial Benefits of Renting and Leasing
Renting or leasing might end up being a touch more expensive when talking about overall expenditure, but the flexibility renting and leasing offers is valuable in itself and there is the potential it might actually end up saving you money in other areas.
For starters, by making small, regular payments your capital isn’t tied to one large lump sum upfront payment, freeing your cash for other investments.
Lease and rental agreements are usually structured as an off book expense, with the instalments taken off as an expense of doing business. This can improve your company’s overall financial picture and maintain a low debt to equity ratio.
Renting or leasing is also a brilliant solution if you’re not sure a piece of equipment is what you need. Try it out over a short term rental period and if it’s a good fit, you can purchase it outright at the end of your contract. This way you’ll be able to reap all of the financial advantages of renting or leasing before committing to buy.
Buying, renting or leasing – there’s no single right or wrong way and one option might be best for one business and another better for someone else. There’s also the option to combine solutions, buying certain equipment outright and opting to rent or lease others.
The best way for you and your business will depend on a variety of factors specific to you so it’s important to have a full understanding of how the different financial options can affect your income, your expenses and your taxation.
At Nexxis, not only are we an expert RVI and NDT supply company, we also specialise in fitting the right financial solutions to the right business. If you’re looking to outfit your business with new equipment but aren’t sure of the best way to go about obtaining it, contact us today and we’ll tailor a cost effective solution to your exact needs. Browse our range of pipe inspection cameras including PTZ camera systems and NDT testing equipment such as thickness testing in our Product Catalogue here.