What is Leasing?
A Brief introduction to leasing
By leasing as apposed to using cash in an outright purchase transaction, your business retains the cash in the business can can be kept to work growing the business. The cash retained can instead be used for buying stock in bulk to save money, advertising to attract new customers, taking on more staff, settling loans etc. It is also ensures you maintain greater liquidity within the business should the need to have immediate cash available arise.
Leasing is effectively a rental agreement between you and the supplier which allows you to acquire the rugged mobile equipment you need to run your business without having to buy this outright. It typically involves a contract between you, Steatite and the finance company, the lessor, where you pay a monthly fee, usually monthly direct debit.
There are several flavours of leasing for companies to choose from according to their circumstances. The most common agreement is a direct lease where the lessor buys the equipment direct from a supplier and retains legal ownership and you use it for the agreed term. This is for the accepted working life of the equipment, typically between one and five years. Cars, company premises and office technology are the types of assets most commonly leased, although industrial equipment is often leased by manufacturing firms and office furniture is one area that is growing in appeal.
Nowadays it is a range of banks, independent leasing companies and increasingly manufacturers themselves, who act as lessors or operate affiliated leasing companies. Although asset finance is less well known than debt or equity funding it is an important way of letting growing businesses release cash into their businesses. According to the trade body, the Finance and Leasing Association its members account for close to £70bn of outstanding finance.