Animal Health Solution - a Henry Schein Animal Health magazine for veterinary professionals
Issue link: https://www.e-digitaleditions.com/i/1259372
10 Covetrus | 855.724.3461 | northamerica.covetrus.com By considering the pros and cons of leasing versus buying, you might find that the cost-benefit of one option strongly outweighs the other for your practice. Leasing the equipment that you need preserves capital and provides flexibility, but that is almost always more expensive than purchasing it. Leasing allows you to acquire assets with minimal initial cash outlay, as equipment leases rarely require a down payment. Lease payments can usually be deducted as business expenses on your tax return, reducing the net cost of your lease. When you purchase equipment, even with a loan, your payments come directly from your taxable "bottom line." If you have a marginal credit score or need a longer term to lower your monthly costs, a lease's flexibility can be a significant advantage. As veterinary equipment has become more technical, the problem of obsolescence is significant. Leasing can allow for easier upgrading of equipment. Also, with leasing, you typically don't pay for maintenance or you have a set fee for a maintenance plan. If something malfunctions, the leasing company is responsible for fixing the equipment or providing you with another. With leasing, you are not building equity because you don't own the asset. Sometimes a lease provides for an inexpensive buyout at the end of the term. In that case, you might pay higher interest, but you will have an expense on your income statement, and you can retain the equipment, if you desire to, at the end of the lease. While both leasing and buying equipment with a loan obligate you to make payments for the entire financing period even if you stop using the equipment, some leases give you the option to cancel the lease if the equipment you leased is no longer necessary. It is important to note that early termination fees almost always apply. The most obvious advantage of purchasing equipment is that you gain an asset with value. When the purchased item's value does not erode substantially with use, it will allow an exchange of this value as a "trade-in" on a technologically updated model in the future. When determining the monthly cost to lease or purchase equipment, you should calculate the potential monthly revenue derived from using this equipment. If your lease or purchase payment costs more than you can make from the equipment, then this might not be the right time to acquire that piece of equipment. When deciding whether to buy or lease equipment, include tax considerations, costs of maintenance, and potential resale or trade-in value. Consider the expected life of the purchased asset, and do not finance purchases over terms that exceed the expected lifespan. Let our team of equipment experts help you with your next equipment purchase. Contact Equipment-NA@covetrus.com for all your equipment solutions needs. Many different types of equipment are needed in veterinary practice, from copy machines to ultrasounds. Some equipment needs to be replaced fairly frequently, and some has a long, usable life. Deciding whether your business should lease equipment or buy it outright depends on your unique situation. https://equimanagement.com/articles/financing-veterinary-equipment Source: Should I buy or lease veterinary equipment?