Question: I need some new equipment, but I'm short on cash. What can I do?

We stumbled upon a great article written by bob Dahms of the Bellingham Herald. He made some good points about equipment leasing and we wanted to share.

[FULL ARTICLE]

Restaurant Equipment Leasing

ExecuTech Lease Group is constantly expanding with new equipment industries we specialize in leasing for.  One of our newest lines is the restaurant equipment industry.  With commercial restaurant equipment we see there are some pieces better suited for leasing than buying outright.  Examples of these items are, but not limited to, Coffee Makers, Commercial Dishwashers, Ranges, and Ice Makers.  One of the major benefits to leasing restaurant equipment is that it can save restaurateurs large sums of money when opening a new restaurant.

If you have decided to go with an equipment lease, here are the steps to follow with ExecuTech Lease Group:

1.      Figure Out The Equipment You Are Looking For
There are numerous equipment suppliers out there who can help you with finding the best equipment for your establishment.  ExecuTech’s role in your purchase is to help you with the funding of this equipment by offering terms that meet your needs.  Make sure when looking at equipment suppliers you look at the service/maintenance package the supplier offers as well as their deliver and installation policy.  Once you have determined the supplier and the equipment contact ExecuTech to initiate the leasing paperwork.

·         If you are unable to find an equipment supplier or don’t know where to begin, please contact ExecuTech for a list of our preferred Vendors.

2.      Work With The Supplier To Determine A Program That Fits Your Needs    
ExecuTech offers numerous programs with restaurant equipment leasing.  Work with the supplier to determine a payment and term that works for you.

·         Most vendors will add service, maintenance, delivery, and install to the overall cost of the lease.

3.      Credit Check

Be prepared, if you have chosen to go with leasing for your restaurant equipment be aware that there will be a credit check. Based upon your credit score, this credit check can determine the payment for your equipment outside of what was already discussed.

4.      Get Ready For Delivery

Upon approval of the lease, ExecuTech will work with your equipment supplier to schedule payment for the equipment. The equipment provider will most likely work with you to determine the best date of install. Your first payment will be due 10 days after the installation of your equipment, make sure your funds are available.

Leasing VS Cash

Leasing VS Cash

In the equipment sales industry the question of purchasing equipment outright or leasing equipment comes up often.  Depending on the leasing or purchase program that your company offers, either could be of great benefit to the customer. However, as a leasing company, we would like to share a few key points when looking to make this decision.

Lease:  Leasing has only a slight impact on cash flow due to small monthly payments being made over time.	Cash:  Buying equipment has an immediate impact on cash flow due to making one large payment up front.
Lease:  Depending on the lease program, the burden of maintenance, interest, taxes and insurance is managed by the lessor	Cash:  The owner of equipment is responsible for all maintenance costs, taxes, insurance, and interest.
Lease:  Leasing equipment requires the user to be responsible for the equipment for the term of the lease agreement.	Cash:  The buyer is responsible for the entire life of the equipment.
Lease:  Depending on the lease program, some lessors offer upgrades of equipment throughout the lease program.  At the end of the lease the lessee is able to upgrade equipment easily.	Cash:  Owners are responsible for the disposal or selling of outdated equipment.  Depending on the choice, the upgrade process can be affected.
Lease:  The lessee transfers all risk of obsolescence to the lessor since there is no obligation to own equipment at end of the lease.	Cash:  The owner of the equipment bears all the risk of equipment devaluation. Obsolescence is the responsibility of the owner.
Lease:  Leased equipment is expensed when the lease is an operating lease. Equipment in this case does not appear on the balance sheet. This can help your company’s financial ratios.	Cash:  Financial accounting requires owners to have equipment appearing as assets with a corresponding liability on the balance sheet. In turn affecting the company’s financial ratios.
Lease:  Depending on the lease program, some lessors offer equipment management services as part of the lease. This leaves the responsibility for tracking the equipment to the lease company.	Cash:  For the life of the equipment, owners are responsible for tracking the equipment.

Office Equipment

Every business, both new and existing comes to a point where purchasing and/or replacing office equipment becomes a necessity.  When making the decision to purchase or lease your equipment there are some major items to look at before making the decision either way:

1)      Cash Flow

2)      Working Capital

3)      Equipment your business needs

Take a moment and determine the equipment that you will need for your business. If you are purchasing equipment to replace old equipment this can be a simple task. Either way, if you are furnishing a new office place or replacing old equipment, large sums of cash will be going out to do so. This in turn can seriously limit your cash flow and working capital. With an ExecuTech lease you can better manage your cash flow with set monthly lease payments and at the end of your lease, you have the added bonus of a $1.00 buyout option.

Also, when looking to purchase or replace your equipment you may find a need for certain equipment, but your budget may not allow for that specific equipment. With leasing, you can get the equipment that you need, with no out of pocket expense.

If you find that the option to leasing would be a better fit for your business. Contact us today and we can direct you to one of our preferred equipment vendors or we can use one of your own.

Phone: (360)713-0695

Email: kylem@elgleasing.com

Do you want to pay your sales reps tomorrow?

ExecuTech Lease Group specialized in Next Day Funding for your leases. Here is how it works: Merchant agrees to terms of lease and signs the lease agreement. Your company submits this lease along with the business documents (business license, DL, void check) to our offices. We will reply by fax or email with an approval and credit score within 15 minutes*. Upon installation of equipment, submit the Delivery and Acceptance for signed by the merchant to ExecuTech and we will fund your deal VIA ACH into your bank account Next Day**!!!!

*15 minuet approvals for all deals. However, if your deal is a decline due to credit, we want to work with you to get those funded. This may take more than 15 minutes to gain approval for the merchant.
**Next Day funding on all deals submitted by 11:30am PST.

Leasing Cost Analysis

To give an example of how a leasing can help businesses with their cash flow as well as the added benefit of tax deductions, see the Analysis below.

1)  Equipment Cost: $15,000.00
2)  Monthly Lease Payment Equipment Cost:  $375.00
3)  Annual Gross Cost ($357.00 x 12mo): $5,625.00
4)  Tax Deduction (Estimated 40% of Annual Gross Cost):  $2,250
5)  Net Annual Cost (Annual Gross Cost minus Tax Deductable Amount):  $3375.00
6)  Net Cost per Month (Net Annual divided by 12):  $281.25
7) Net Cost Per Day (Net Cost Per Month divided by 22*):  $12.78
8) Net Cost Per Hour (Net Cost Per Day divided by 8**):  $1.59


*22 is average business days in a month (you can adjust for your schedule)
**8 hours, based on the average business schedule

Differences Between Leasing and Bank Loans

There are numerous differences between leasing and bank loans. A few of these are as follows:


Down Payment:  With Leasing merchants have equipment that is 100% financed.  With a Bank Loan, more often than not, merchants will have to come up with 20% to 30% of the total cost of their loan amount.

Interest Rates:  With Leasing, merchants have a fixed rate and a fixed payment.  With Bank Loans, merchants are often seeing an adjustable rate.

Term:  Equipment Leasing through ExecuTech gives your company the option of Leasing for a term of 12 months to 60 months (1-5 yr).  With Bank Loans, most are standard 2-3+ year loans.

Financial Reporting:  Leases are not required to be reflected on balance sheet as debt.  With a Bank Loan it will be carried on balance sheet as debt.

Tax Benefits:  Leases are usually fully deductible over the term of the lease.  Bank Loans are depreciated over the IRS's life of the equipment.

Cash Flow:  Leases help to free up cash allowing you to invest further in your business unlike a Bank Loan where your capitol is tied up in bank lines preventing expansion.

Sales Tax:  With a Lease your sales tax is financed with monthly payment, however, with a Bank Loan it must be paid in advance.