Equipment leasing
Leasing is increasingly used by businesses of all sizes to help unlock working capital and simplify Cash Flow Management. Leasing is tax efficient and will allow you to more accurately plan for current and future IT expenditure.
Octavia are able to offer leasing arrangements for your complete IT infrastructure, including hardware, software and configuration. We are even able to integrate ongoing IT support, meaning your business has one, fixed monthly cost for your business IT function.
The benefit of Equipment Leasing through Octavia is that it offers 100% finance and therefore covers the total cost of equipment (including hardware, software and configuration). A lease is the "rental" of equipment, therefore; there are no deposits required on the equipment that your business needs and no need to have to find the whole of the VAT as an 'upfront' payment which may impose additional cash-flow pressure onto the business. These factors alone contrasts with many Commercial Bank Equipment Loans, as they often require a deposit, ranging from 20% to 50%. In fact, most leases will only require the first monthly rental and last payment, in advance of delivery.
Even if you only require a small amount of equipment, an Equipment Lease can result in a tremendous reduction in the expenses involved in upgrading your equipment, giving you the opportunity to put thousands of pounds of working capital back into your business and meaning that money does not have to be tied up in depreciating assets.
Planning for the future
A second advantage of leasing your equipment is that it can help you to avoid "technology obsolescence", which occurs when a business lacks the technology required to enable it to remain competitive. Leasing your equipment helps to avoid obsolescence by allowing you to upgrade your equipment every few years, maintaining similar fixed monthly payments.
Tax Advantages
Leasing your equipment through Octavia can also provide your business with a substantial tax advantage. While you should always consult with your tax advisor before deciding, it helps to know that most of our equipment leases can be structured so that you can write-off 100% of the annual lease payments. This is because a lease is a rental and as your business is only 'using' the equipment, the monthly payments are the same as any normal monthly expenses. This fact contrasts to the current tax laws regarding Equipment Loans, as they only allow a business to write-off the interest paid on the loan and the writing down allowance on the asset which will rarely match your actual outgoings. Once again, you can see how an Equipment Lease can be beneficial to your business.
Leasing also allows you to keep the equipment off your balance sheet. This is because the equipment is being rented and therefore actually belongs to a company other than the one that is using it. For this reason, leases are often referred to as 'off balance sheet' financing - a tremendous advantage to both large and small businesses.
Large businesses prefer this leasing option as they do not want to own millions of pounds worth of equipment; partly because, with daily usage, the equipment would depreciate substantially and whoever owns the equipment is responsible for that depreciation on their balance sheet. Also, large companies may insist that a Board of Directors approve any new loans. However, a lease is less likely to require approval by the Board.
In smaller businesses, leasing can also prove an advantageous option as it means that additional debt will not be shown on the balance sheet. If it was to be on the balance sheet, for example, in the case of using a loan, it may affect their ability to borrow money in the future. By showing less debt on the balance sheet, a company will also seem more attractive to potential buyers, should a time arise when you consider selling your company
