XS International, Inc. provides leasing options to our customers. Please
ask your sales representative for a quote on leasing the equipment you
plan to acquire at the time of quotation. We have excellent programs for
emerging companies as well as large entities.
Benefits of Leasing Equipment
Leasing is Flexible. Companies have different needs, different cash flow
patterns, different and sometime irregular streams of income. For example,
startup companies typically are characterized by little cash and limited
debt lines. Mature companies might have other needs - to keep debt lines
free, to comply with debt covenants, and to avoid committing to equipment
that may quickly become obsolete. Therefore, your business conditions
- cash flow, specific equipment needs, and tax situation may help define
the terms of your lease. Moreover, a lease provides the use of equipment
for specific periods of time at fixed rental payments. Therefore, leasing
allows you to be more flexible in the management of your equipment.
- Easier credit terms — You'll likely have an
easier time finding someone willing to lease you equipment than finding
someone willing to extend you credit to purchase the equipment. One
reason is that with a lease, title to the property remains with the
lessor so if you miss some payments, the lessor can quickly get the
equipment back. Furthermore, under a lease you may be able to negotiate
a longer payment period (resulting in reduced payment amounts) and/or
a more flexible payment schedule (resulting in a better matching of
your payment obligations with your cash flow) than you would be able
to negotiate under a loan.
- Avoidance of financial restrictions — an equipment
lease rarely includes any provisions that restrict your future financial
operations. In contrast, it is not uncommon for a loan agreement to
include restrictions on your ability to acquire additional equipment
or to borrow additional funds without the lender's permission.
Leasing is Cost-Effective.
Equipment is costly and some of the costs are unexpected. When you lease,
your risk of getting caught with obsolete equipment is lower because you
can upgrade or add equipment to best meet your needs. Further, your equipment
needs can change over time due to changes to your company, such as diversification.
Leasing allows you to stay on the cutting edge of technology.
- Maintenance support — under some leases the
lessor may agree to be responsible for maintaining and repairing the
leased equipment. Although the cost of this service will usually be
factored into your rental payments, you'll at least avoid the problems
of having to find qualified repairpersons and of being burdened with
unplanned repair costs. Furthermore, a responsive lessor who is familiar
with the equipment being leased can significantly reduce your equipment's
downtime when repairs are necessary.
Leasing Has Tax Advantages. Rather than deal with depreciation
schedules and Alternative Minimum Tax (AMT) problems, you, the lessee,
simply make the lease payment and deduct it as a business expense.
- Current deductibility of rent — assuming that
the IRS doesn't recharacterize
your lease as a purchase for tax purposes, leasing provides a potential
tax advantage in that your lease or rental payments are fully deductible
if you use the leased asset in your business. In considering whether
leasing will provide an actual tax advantage, however, you need to weigh
the corresponding disadvantage of being denied any depreciation deductions
with respect to the leased property.
Leasing Helps Conserve Your Operating Capital. Leasing
keeps your lines of credit open. You don’t tie up your cash in equity.
Also, you avoid costly down payments. With other advantages such as off-balance
sheet financing, leasing helps you better manage your balance sheet.
- Balance sheet appearance — a frequently mentioned
advantage of leasing is that it may improve certain financial indicators,
such as your debt-to-equity and earnings-to-fixed-assets ratios.
The improvement occurs if you're able to exclude your leased assets
and their corresponding rental obligations from your balance sheet but
do include the earnings the assets produce (net of rent expenses) on
your income statement. The actual benefit of the improved indicators
may be negligible, since careful lenders will likely equate your lease
commitments with long-term debt obligations. Current accounting rules
have also eroded this benefit by requiring you to report on your balance
sheet assets leased under many financial
leases.
To learn more about our leasing options
please ask your sales representative. |
