Leasing is just one tool for financing the acquisition of assets. But, it may provide significant advantages over other acquisition strategies. As J. Paul Getty stated, "Buy what appreciates, lease what depreciates." With the relatively short useful life span of IT assets, leasing makes sense.

Preservation of Capital
Companies need to fund receivables, inventory, payroll and equipment. Some businesses may not have access to bank loans or supplemental sources of capital. Often, especially in a down economy, a shortage of capital can develop. Leasing can help prevent this by reducing the capital required for your equipment.

Low Up-Front Costs
Funding your equipment acquisitions with a conventional bank loan usually requires a 10 percent to 20 percent down payment and often includes restrictive covenants. Leasing normally requires only one or two monthly payments in advance, which are applied to future payments.

Overcome Budget Constraints
Most companies operate under budgetary constraints - the result of a formal planning process or the availability of funds. With formal planning, companies can use leasing to bypass the capital budget, as payments are usually accounted for as expenses. If the budget is based on capital resources available and the company can’t fund the full purchase price, a payment option is often the answer.

Keep on Top of New Technology
Leasing helps keep technology up to date by facilitating periodic replacement of technology assets and permitting replacement even if capital resources are not available.

Solves Disposition Issues
When customers reach the end of their leases, they can return the equipment to the leasing company. This relieves them of the hassles, costs and liabilities involved in disposing of technology equipment.

100-Percent Financing
In most cases, the lease covers all expenses: the full cost of the equipment, service, shipping, installation costs and maintenance.

Potential Tax Savings
Owned assets are normally capitalized. Therefore, depreciation and interest expense are written off for tax purposes. Monthly lease payments are typically viewed as operating expenses. This usually offers significant tax benefits. Companies should always consult with a financial advisor to determine the proper tax strategy.