How Equipment Leasing Improves Your Balance Sheet

April 28, 2016 Posted By: PCF No comments

It’s no secret that your balance sheet is a make-or-break factor in your business. Because balance sheets provide an indication of credit standing and how your business will perform in the future, smart industry leaders look for ways to improve.

The good news is equipment leasing improves your balance sheet significantly.

Before we reveal how equipment leasing creates a stronger balance sheet, here is a checklist of the most common benefits…

  • Equipment leasing allows your business to conserve working capital.
  • Equipment leasing affords you tax benefits on Section 179.
  • Equipment leasing keeps you one step ahead of the future and ensures you never have to deal with outdated equipment.
  • In many cases, equipment leasing allows you to set up flexible rate payment plans. Keep in mind that this is not available everywhere, so click here for more information on where to find flexible rates.

Why equipment leasing makes for a better balance sheet.

An overlooked equipment leasing benefit is how it factors into your balance sheet.

Equipment leasing makes for a more attractive balance sheet, as your flexible monthly lease payment is listed as a business expense—and not as long-term debt or financial liability.

By extension, when your business has little-to-no debt on its financial statements, you will have a much easier time securing funding down the road.

How equipment leasing improves your balance sheets.

When you take advantage of leasing through Providence Capital Funding, Inc., your asset will appear on your balance sheet as if it were a straight-out purchase.

Even though you are conserving working capital and avoiding bank loans through equipment leasing, your accounting records will classify the equipment lease as a direct purchase.

For example, let’s say you are leasing a new x-ray machine for your radiology practice. This equipment will be factored into your balance sheet as a fixed asset. In other words, the machine is a property.

When you assign a value to the machine on your balance sheet, the number will reflect the market value of it or the accumulated value of your flexible lease payments. (It is highly likely that your lease payments will equal less than the full value of the machine.)

In conclusion…

Business owners and industry leaders can make their balance sheets more attractive through equipment leasing—especially if the lease equipment includes flexible rates based on what makes sense.

When you opt for equipment leasing over traditional financing options, your flexible lease payment is seen as a business expense as opposed to a long-term debt, which makes your credit standing much stronger.

To take advantage of equipment leasing now and further streamline your accounting processes, click here to fill out your application.

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