How to Buy

Ten Reasons to Finance

Gain financial flexibility
	Financing	Buying
Cash	Preserves cash for higher yielding investments.	Consumes cash.
Impact on financial statements	Favorable impact on financial ratios (current ratio and debt-to-equity). Rental payments are simply footnoted on balance sheet.	Equipment booked as an asset. Requires depreciation schedules.
Income statement	Favorable impact on profitability ratios (return on assets).	Equipment ownership generally increases the expenses over the life of the asset.
Budgetary considerations upgrades	Payments are typically made from the operating budget. Allows companies to acquire needed equipment when capital budgets are exhausted or frozen.	Equipment purchases typically made from capital budgets, which require additional approvals. New equipment cannot be acquired if capital budgets are exhausted or frozen.
Equipment disposal	Eliminates uncertainty of remarketing or disposal of old equipment. Equipment can simply be returned at the end of the lease.	Companies must comply with strict EPA regulations when disposing of equipment, which can be costly and time consuming.

Keep your business on the leading edge
	Financing	Buying
Expected life uncertainty	Purchase equipment at end of the lease term at fair market value or extend the lease if the equipment still has a useful life. If not, the equipment can simply be returned to lessor.	If the equipment cannot be re-deployed, companies are faced with the costs of disposal or recycling.
Obsolescence protection	Companies can upgrade during the lease term and have a number of options at the end of the lease term, including simply returning the equipment.	Companies may require new technology at shorter intervals than depreciation schedules allow. Acquiring new equipment may result in a book loss.
Simplicity	Provides one-stop shopping for total solutions. Financing typically requires fewer internal approvals than a capital purchase.	Purchasing typically requires internal approvals from capital budget committee.
Flexibility	Financing provides more options during the term of a lease and at lease termination. Equipment can be upgraded or swapped during the term of the lease if desired.	Upgrading equipment may be more difficult if capital budget approvals are required. There are no options to swap or return the equipment.
Leading edge	Maintaining leading edge technology is simpler with financing since companies do not own the equipment directly.	Companies must redeploy, remarket, or dispose of existing equipment before acquiring new technology.