With the volatility created by the COVID-19 pandemic, many businesses are beginning to consider ways that they can navigate through these precarious times. It is understood that the business impact of COVID 19 will last for some time and that buying behavioural change is already underway*. Organisations are preparing to preserve cash in order to endure volatility in markets.
"Australian organisations, government agencies and educators are having to adapt at a pace which is forcing them to pivot quickly to new ways of working while making tough decisions about what areas of spending will be prioritised", says IDC Australia and New Zealand Research Director, Louise Francis. CFO's are looking for OpEx options to complement CapEx expenditure which will enable greater equity cushioning and structuring of asset portfolios.
As such organisations are considering leasing options to acquire equipment instead of paying for this equipment in cash. There are a number of immediate benefits to leasing as follows:
Take control of your cashflow
You don’t need to pay everything upfront. Instead, lease payments are spread over the useful life – typically 2 to 5 years – of equipment that you can continue to order from your preferred suppliers, at prices you control.
Reduce costs
Leasing is almost always more cost-effective than financing at corporate rates. This is because when we purchase equipment we invest our cash in its assessed market value at the end of the lease, effectively providing interest rates of 0% or less.
Avoid end-of-term ownership responsibilities
Dealing with equipment at the end of its useful life can be distracting, time-consuming and costly. We provide a full range of end of life services to assist with onsite decommissioning, packaging, transportation and secure wiping. This takes the responsibility, cost and complexity of removing equipment out of your hands.
Manage your capital and debt
Leasing is a strategic tool for proactively managing the your balance sheet liabilities. By not tying up your capital in equipment purchases, you can use it to grow revenue through pursuing new growth opportunities, expanding operations, or making opportunistic acquisitions.
Stay up to date
New equipment is typically more efficient and cost-effective to run, so regular replacement of older equipment with the latest technology increases productivity and profitability, providing tangible benefits to the bottom line. The lease cycle also enforces discipline around timely decision-making on the replacement, upgrade or extended use of equipment.
To help you truly understand the pros and cons of leasing, Quadrent has released a whitepaper as a comprehensive guide.
This whitepaper covers topics such as;
- What is a lease?
- Role of lessee and lessor
- 6 benefits of leasing
- Understanding total cost of ownership
- Lease vs. Bank finance comparison
- Keeping track of leases
- End of term options
- Frequently asked questions
*Deloitte Economic Report, April 2020
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