Remaining Agile and Flexible in Your Company With Leasing

The accelerating pace of change in business, whether it's driven by technological developments or persistent economic uncertainty, requires companies to remain agile and flexible. Key areas where companies need flexibility are their funding sources and how they access the assets they need to generate revenue and maintain their operations. The way your business uses its assets should help drive growth while providing flexibility to adapt to changing business conditions.

Quadrent, in collaboration with SAR Accounting Advisory, recently hosted a webinar outlining how companies can master leasing strategies to boost cash flow and proactively manage a potential economic downturn. View the webinar recording here, and click here to read the summary. Keep reading below to learn how leasing can help your company remain agile and flexible.

Think outside the box with what your company can lease

Almost any asset can be leased. From assets, such as laptops and mobile devices, to software and systems, some funding structures offer the ability to spread the cost of implementing new assets and systems over their useful life or the term of the lease agreement. This can help companies access what they need to generate cash flow and grow without sacrificing working capital. Leveraged finance, for example, allows companies to collateralise funding with future cash flows — an option that isn’t available through traditional funding channels.

Investigate different lease structures

There are different types of leases, such as operating leases and finance leases, each tailored to varying business needs. Operating leases often have lower monthly payments and may include maintenance services, while finance leases can lead to ownership at the end of the term. Additionally, assets currently owned by your business through a CAPEX investment can be sold to a lessor and leased back to the company. This gives the business a cash flow boost, transfers the ownership risk to the lessor, and makes decommissioning or upgrading assets easier.

It’s important to remember that since IFRS 16 came into effect, the sale and leaseback process has become more complicated. If your company is assessing this option, you should seek advice from leasing experts who can ensure your leasing arrangements deliver the desired commercial and accounting outcomes.

Look for flexible lease terms

Many leasing agreements offer flexible terms, including short-term leases or the ability to extend, renew, or terminate the lease early. This flexibility enables businesses to adjust their equipment needs based on changing operational requirements without being locked into a long-term commitment.

Choose customisable end-of-lease options

At the end of a lease term, businesses typically have options such as returning the equipment, purchasing it at a predetermined price, extending it on a month-by-month basis, extending for a fixed term, or entering into a new lease for updated equipment. This allows companies to return equipment they no longer need or upgrade to newer models without the hassle of selling or disposing of owned assets.

Consider scalability if your business is growing

Leasing can be particularly beneficial for businesses that need to scale operations quickly. It allows for the addition or reduction of equipment as needed without the long-term commitment of ownership. If you need scalable leasing solutions, look for providers that allow businesses to add additional equipment as needed. For example, if your business experiences growth or takes on new projects, it can lease more equipment to meet the increased demand. Conversely, if demand decreases, the business can return equipment or downsize at the end of the lease term. This also allows businesses to align lease terms with cash flow cycles or specific project timelines.

Use leasing to regularly upgrade equipment

Leasing allows businesses to upgrade equipment more easily as technology evolves or business needs change. Instead of being stuck with outdated or inadequate equipment, companies can lease new models that better fit their requirements. When you’re assessing leasing providers, look for companies that make it easy to upgrade assets at the end of the lease term, including making sure the old assets are disposed of or recycled appropriately.

Gain flexibility in your asset use with Quadrent

Leasing is a solution that can diversify your funding sources, enhance cash flow, enable more flexibility and transfer ownership risks. From unlocking cash in owned assets to financing innovative technologies, leasing can help your company remain more agile and flexible in the face of constant change. By working with a leasing provider who also understands how to structure flexible and scalable products, your business can access exactly the assets it needs when it needs them.

Quadrent's asset financing and leasing solutions can help you unlock cash flow and transfer the risk of asset ownership. Click here to contact our team for more information.