Leasing is a cost effective way to finance your Telecom equipment.
Capital investment decisions are critical to the financial viability of all organisations. Whether you are a sole trader, Government body or an international conglomerate, the principles are still the same: a poor investment - or no investment at all - could leave your business in a position where it cannot complete effectively in the marketplace. Key to this decision is not just what to invest in, but how to finance the investment.
Even for cash rich companies, leasing and finance options provide a wide range of business benefits, from taxation savings and budgetary control to maintaining existing lines of credit or working capital.
Many people are not aware of the huge tax benefits attached to leasing. Because of restrictions on the tax allowances available when a client pays for a fit out from capital budget - leasing can be a cheaper option for a profitable company.
It can be cheaper than paying cash!
If you pay for the instalation or the expansion of your telephone system from your cash flow, only a limited percentage is allowable for tax purposes. Because of the 'intangible' elements, the Revenue only allows you to claim capital allowances against approximately 65% of the project. However, if you lease the works, the repayments are 100% allowable unlike any other form of finance such as a bank loan. This 100% allowance on payments makes leasing the most tax efficient method of refurbishing a building and can work out cheaper than paying cash.
Be totally flexible
Payments can match the cash flow of the business: Payments can be made monthly or quarterly to suit the customer's cash flow. One of the most common reasons quoted for companies failing is bad management of cash flow. Leasing helps you to manage your cash flow more effectively.
Allocate payments from a revenue budget and not a capital budget
Leasing, unlike other forms of finance such as bank loans, is fully allowable against tax. This 100% allowance on payments makes leasing one of the most tax efficient methods of acquiring or upgrading your telecoms equipment.
Overcome budget limitations
You can make the most of your budgets by spreading the cost over 3 or 5 years and acquire the system that meets your needs fully, rather than that which your budget dictates.
Flexible master agreements
You can sign one master lease agreement on day one and then simply sign additional schedules each time you need to add functionality to existing solutions.
A typical agreement is over 36 months. The duration of agreements are designed to suit your budgets and do not have to be restricted to whole years. Only the expected useful life of your equipment should determine the maximum length of agreement.
What does it mean?
- Rentals remain fixed for the full period of the agreement providing greater budgetary planning.
- The full value of the rentals paid under the agreement can be fully offset against Corporation Tax.
- The equipment can be easily upgraded and/or replaced at any time throughout the agreement by simply restructuring the schedule of the agreement.
- Leasing provides immediate access to equipment without the need to use valuable working capital.