Leasing & Lease-purchase
Leasing allows a company to obtain the use of a fixed asset without ever owning that asset. Under a leasing agreement a company agrees to pay a periodic (normally monthly) fee in return for full access to a particular piece of equipment. For the full term of that agreement however the equipment remains the property of the leasing company (lessor).
The terms of a leasing agreement will vary according to a number of factors including the length of the agreement, the type of equipment and whether an optional purchase price has been agreed for the end of the lease period.
The advantage of a leasing agreement is that a business gains access to an asset without having to pay for it up front. At the end of the lease period they can walk away from the agreement and the asset provided it is left in an acceptable condition. From an accounting point of view the asset will not appear on the Balance Sheet as the business never owns it. The payment premiums will however be treated as a cost in the P&L. The advantage is that the lease premiums are a known cost over a fixed period, so easy to account for. When considering leasing it is also adviseable to take professional advice on the tax implications.
BFS can help you in deciding whether leasing is the best option in any situation. We can then help you to find the leasing company that provides the most suitable leasing package to meet the needs of your business.