Financial Returns
Benefits of an Operational Leasing
- Long Term fixed rate financing, not subject to inflation
- Term of Rental 3, 5 or 7 Years
- Improve Return On Assets (ROA) and Return On Investment (ROI) ratio’s
- Improves cash flow
- Conserves capital
- Conserves credit lines
- Paid from Revenue Budget, fully tax deductible as P&L expense
- Payable Monthly, Quarterly or yearly
- Off – Balance sheet compliant
- Simplified accounting
- Rentalised in any of the major currencies GBP (£), US ($), EURO (€)
Why an Operational Leasing
The differences between an Operating Lease and a Standard Lease / Lease Purchase (collectively called “Capital Lease”) are summarised below:
| Operating Lease | Capital Lease |
|---|
| Paying for use | Financing a purchase |
| "Off balance sheet" avoids capital approval | "On balance sheet" requires capital approval |
| Smaller payments than Capital Lease | Larger payments than Operating Lease |
| Can negotiate purchase downstream at fair market value—typically 10-15% | Downstream purchase price stipulated upfront |
| Payments 100% tax deductible | Payments 100% tax deductible |