Are You A Slacker? Lease Financing Intelligence Can Increase Sales And Profits. Mastering Equipment Financing Companies Isn’t As Hard As You Think

Master A Few Lease Finance Basics For Business Success


OVERVIEW – Information on equipment finance companies in Canada. Understanding leasing and asset financing can make your firm a winner


Nobody likes being called a ' Slacker '.

And you don't need to be. ( We're the first to admit though that the working for a living thing is sometimes over rated ! ) When it comes to equipment financing in Canada a little bit of work and knowledge can take you a long way when it comes to utilizing new assets for profits and sales growth within your firm. Here's what you need to know!

Managing a relationship, either long term, or even once with equipment finance companies is all about understanding where the other party is coming from. You have a reason to require their services, and in the current Canadian asset finance environment we can assure you there’s lots of competition out there looking for your business.

It's about though, understanding where the lease firm is coming from. Their charter is pretty close to yours, making a profit... on your firm. It’s your job to make sure it’s a ' reasonable profit '!

The Canadian lease finance industry touts itself as a 100% full financing business. That is to say very little... if any , down payment is required for the financing of assets , and don't forget also that you have a lot of payment flexibility with respect to staggered payments, seasonal payments, quarterly payments, etc, etc and on it goes. So if you do have reasonable credit quality make sure you are bargaining hard for little to no up front payment and focus on cash flow monthly payments that make sense for your type of business.

Fortunately or unfortunately our clients are always pretty well just focusing on the implicit interest rates in a lease. When they feel they have won at that game they feel they have entered into the consummate leasing transaction... via the ' monthly payment '.

While your lessor does in fact make most of its profit on the rate it should never really be considered the be all and end all. Other factors include the quality of the documentation you are being asked to sign, the residual value of the equipment at end of term, and any tax and accounting benefits that you and the lessor split or share. So yes, equipment financing companies borrow money themselves to stay in business, and the more they can charge you equates to more profit, but remember those other issues also.

Oh and one final point on that whole ' rate ' issue. In the 2012 time frame the leasing financing industry is very competitive, so your sales, profits, cash flows and balance sheet have already pretty well determined what your interest rate is. Enough said on that subject.

We mentioned the value of the asset at the end of the term as another key component you need to think about. If you are returning the asset to the leasing company they have spent a bit of time already, unbeknownst to you it would appear! deciding what that asset will be worth a few years from now when your lease ends. Let's say that’s 10%. They then price their lease according to not only credit risk, but what is known as the residual value of that asset a few years out. By taking sometime to understand that value yourself you have some negotiating power on price and lease structure and term.

So, our advice? Don't be a slacker when it comes to dealing with equipment finance companies. A classic case of a bit of knowledge saving you a lot of time and money! Speak to a trusted, credible and experienced Canadian business financing advisor who can assist you with your lease finance needs.

7 PARK AVENUE FINANCIAL
CANADIAN EQUIPMENT FINANCING EXPERTISE


Stan Prokop - founder of 7 Park Avenue Financial –

http://www.7parkavenuefinancial.com

Originating business financing for Canadian companies , specializing in working capital, cash flow, asset based financing . In business 7 years - has completed in excess of 80 Million $$ of financing for Canadian corporations . Core competancies include receivables financing, asset based lending, working capital, equipment finance, franchise finance and tax credit financing.
Info re: Canadian business financing & contact details :

http://www.7parkavenuefinancial.com/equipment_finance_companies_leasing_financing.html