There’s no denying that amongst the many options you may have when acquiring a vehicle, leasing is undoubtedly attractive. In the past, it wasn’t readily seen as an option – you simply bought a vehicle for your business and offset it against your taxes. It is a necessary expense, and many business owners saw it that way. But today’s business owners are a lot savvier, which includes their decisions regarding the vehicles the company needs. More businesses are opting for vehicle leasing, and it’s not just because of the savings on cost but also for other benefits. So why is vehicle leasing a more popular option for businesses today? Here’s what you need to know.
Better cash flow for your business
When you buy a vehicle outright, your cash flow can be affected, and we all know that cash flow is the lifeblood of any business. On your balance sheet, it would show as a liability, and it can also affect your abilities in terms of securing further credit lines when necessary. When you lease, you don’t have to dig deep into your pockets because you don’t spend as much money as when you buy, and you can also allocate your budget for other expenses. It’s easier to budget your finances because you know exactly how much you have to shell out for your vehicles for a certain period.
Avoid wasting your finances on something that depreciates
Your business will have several assets, but a vehicle is not one of them. Why? The answer is simple – it depreciates. Vehicles are not considered assets, and as such, they’re not something you should spend a whole lot of money on. Aside from this, you have to find a way to dispose of the vehicles after a few years, which is another headache. What you want is something that you can make use of for several years, and then once the term has ended, you can just return it and choose a new model and another leasing deal.
Vehicles will always depreciate, and if you purchase a fleet of vehicles, these will all go down in value over time, so even if you sell the fleet, you will never be able to reclaim the entire amount you spent. But the payments you make per month for car leasing or contract hire deals have already factored in the vehicle’s depreciation for the length of the contract so that it can be a much cheaper alternative to buying.
Enhance your staff’s safety
Here’s another aspect you may not be fully aware of – leasing vehicles can potentially enhance your staff’s safety. For instance, if you simply cannot afford to purchase vehicles for your business outright, you may end up looking for used or second-hand vehicles. It can be advantageous in regards to your costs, but you may not be able to give your staff a vehicle with the best safety features. New vehicles will have more safety features compared to old ones, and leased vehicles often come with a warranty from the manufacturer as well, which can further enhance your peace of mind and the safety of your staff.