|
|
Test equipment rental improves cash flow by allowing retention of capital or providing capital for investment into other areas of your company. If you make an out-right purchase of calibration equipment, all of the capital required for the purchase is gone as soon as the invoice is paid. However, if the cost of that electrical test equipment is spread over three years, only a portion of the electronic test equipment cost is required each month or quarter. This gives you the flexibility to use your unspent capital (the total cost of the test equipment rental minus the small monthly or quarterly payment) for operating expenses, appreciable acquisitions, or investments.
A bank loan in comparison, will tie up traditional lines of credit that can be used elsewhere. Test equipment rental is a solution that relieves credit and capital restrictions. Leasing can also provide the advantage of off-balance sheet accounting, improving the financial picture you can present to your stockholders, business partners, and creditors.
By spreading the cost of electrical test equipment over a defined term you acquire more electronic testing equipment than your capital budgets would normally allow. For example, to purchase $1,000,000 worth of calibration equipment requires an immediate expenditure of $1,000,000, while leasing twice that amount would require approximately $58,700 monthly based on a 36 month term. Or, you can lease the same amount of electrical test equipment that was planned to be purchased, and use the unspent capital for other operations, business expenses, or investments.
The GartnerGroup has stated that test equipment rental, in conjunction with a coordinated asset management program, can actually lower the total cost of ownership (TCO) by as much as 15% for assets. Leasing also avoids other ownership costs, such as:
-
Structuring acquired assets as an operating expense, rather than a capital outlay, generally appears more favorably on the balance sheet than obtaining budgetary approval for capital purchases
-
Off-balance sheet benefit #1 - when money is borrowed to purchase electronic test equipment, liabilities are increased, impacting asset-to-liability ratios effectively reducing and jeopardizing liquidity
-
Off-balance sheet benefit #2 – Test equipment rental payments are generally 100% tax-deductible because they are an operating expense
-
100% financing is normally available and lease terms can be structured beyond normally available loan terms.
|
|
