Equipment is a great asset for any business. With that in mind, is there any way a company can use its equipment as leverage in times of need to increase cash flow into the business? The answer is yes. That can be done through lease buybacks.

So, what are lease buybacks, and how can you use them to help your business?

Lease buyback

A lease buyback allows a company to sell its equipment to a leasing company in exchange for cash. The leasing company, on its part, can lease the same equipment back to the company. This will allow the business to continue its daily operations with the same equipment with the extra benefit of having the cash needed for use without going into debt or affecting business profits. Lease buybacks work for any business, no matter its size or assets.

Benefits of lease buybacks

Maintenance and repair

When a company sells its equipment to a leasing company, the maintenance and repair responsibilities fall to the company. The business owner will not have a responsibility to maintain the repairs, freeing up more money.

Future upgrades

The selling company can either lease their old equipment back or get more updated equipment from the leasing company. Because of this, the business can get updated and modern equipment without spending more money on upgrades.

Tax savings

Lease payments are written off as business expenses, especially for small companies. It gives the business the chance to deduct the lease payments giving them an advantage over depreciation and maintenance deductions. The business saves more money and only has to budget for lease payments.

Preserves finances

Companies can create stable bases with lease buybacks. They get the opportunity to save more money which will give them enough capital to further the company’s growth in the future. Businesses also might not need credit advances. The lease buyback provides them with more capital to move forward instead of getting deeper into debts.

If you are a business and have cash flow problems, consider doing a lease buyback. It will free up more money for you and remove maintenance responsibilities. There are many benefits to lease buybacks and few disadvantages. You can save more money and not worry about upgrading your equipment. Let your equipment earn money for you.