The Tax Shop Group director, Bennie Groenewald, advises on the pros and cons of leasing medical equipment versus purchase.
In these crazy times, businesses and medical practices alike are under severe pressure.
Whether you are looking to upgrade and modernise your equipment, growing a practice or in need of enhancing the efficiency of services with cutting-edge medical equipment, there is a financial solution for everyone.
But many healthcare professionals are faced with the decision of whether to buy or lease equipment.
If your practice needs new equipment or technology, but you can’t afford it, leasing may be a financing solution to consider.
Leasing enables you to make smaller monthly payments, typically over a multiyear period instead of buying it all at once. Depending on the terms and conditions, at the end of the lease, you may return the equipment or buy it for a price that factors in depreciation and how much you’ve paid over the life of the lease.
While the appeal of owning your equipment is often strong, leasing can free up significant capital for small or even larger practices. Leases are usually easier to obtain and have more flexible terms than loans for buying equipment. This can be a significant advantage if you need to negotiate a longer payment plan to lower your costs. Furthermore, it’s easier to upgrade equipment and often allows practices to address the problem of obsolete equipment and technology.
Purchasing equipment can be expensive and it may be hard for many small practices to afford everything they need, upfront. Equipment leasing is a way to spread out the costs over a set amount of time.
With equipment leasing, you pay a fixed rate for a specific period whereby the interest and fees are built into the payment. Equipment leasing contracts typically run for three to five years or longer depending on the type of equipment.
Apart from freeing up cash for other financial needs in growing your practice, fixed leasing payments help you with monthly cash flow management. Other benefits include an income tax break, because you can deduct your leasing costs as a business expense.
*Content supplied by the Tax Shop Group