When it comes to equipment finance services via a leasing company we’ve never been quite sure if the Canadian business owner and financial manager understand the true power of asset finance. Each year hundreds of billions of dollars is financed in North America (that includes Canada by the way!) and the asset categories could not be any broader.

Your firm’s ability to maximize on the benefits of leasing is key. Part of the problem in that challenge revolves around the types of leases that are offered by the industry, and that fact that there are competitive forms of asset finance. In truth the form of finance you enter into is really driven by credit, tax, accounting and legal issues that may or may not be critical to your final asset investment decision.

The essence of the actual ‘ lease ‘ decision revolves around whether you really want to either ‘ use’ and asset or ‘ own ‘ and asset. In lease jargon that’s an ‘operating lease’, or a ‘capital lease’, respectively. If it is not one of those at the end of the day its ‘ secured loan’ or a ‘ bridge loan’ with collateral.

Where you can exhibit the true ‘ power ‘ of a leasing company solution is when you have a strong handle on the actual useful life of the asset you’re buying. Many firms such as yours acquire assets that have a long term of functionality. Using technology as an example that ‘ useful life’ curve becomes a lot shorter, for in technology things seem to change pretty well every month or so. At least that is how it feels.

Can you actually ‘ profit ‘ from a lease finance scenario. Potentially you could if you entered into an operating lease and made great business decisions around selling or keeping the asset at the end of the lease term after you have satisfied your legal obligations re monthly payments, etc.

And if you are wondering why your lessor suddenly looks so happy at the end of a lease term it’s because they have smartly anticipated taking back the asset and refinancing it all over with someone else. So we suppose at this point you’ve transferred all your power to your lessor.

We think, and experience everyday, situations where clients are only focused on ‘ rate ‘ and ‘ ‘monthly payment ‘.

Many business owners/managers dont necessarily appreciate the role of proper documentation in a leasing company deal. Proper documentation is key to understanding your rights and obligations in any asset finance transaction.

A great tip we offer clients is to ask them to consider the concept of a ‘ master lease ‘ document if they are entering into numerous asset financing transactions based on the nature of their business. That document is signed once, and when it is done properly protects you forever

The true power of equipment finance services revolves around your right to capitalize on economic advantages, recognizing when an interest rate is fair or could be improved upon, and achieving the many benefits of cash flow and working capital management that come with a leasing company solution.

Seek out and speak to a trusted, credible and experienced Canadian business financing advisor who has a proven track record in asset finance power solutions