EXPERT ADVICE To some, the benefits of leasing may sound unrealistic. Some people have a bias toward buying or owning equip-ment, either because they’ve been told it’s the way to go or they have simply always done it that way. Without actually crunching the numbers to compare leasing versus buying, even professionals like accountants can sometimes find themselves giving a knee-jerk response when asked about leasing. Leasing is a strategy, not financial voodoo. It’s an option that is replicated throughout almost every industry for all kinds of equipment from dentist chairs, tanning beds and IT to heavy-duty ma-chinery and even ambulance equipment and supplies. In the U.S., nearly one-third of the US$883 billion worth of equipment that companies acquire annually are ob-tained through leasing agreements (ac-cording to the U.S. Department of Commerce). Let’s debunk some of the myths and arm you with competitive, cost saving strategies only leasing can give your clinic. ASSET MANAGEMENT Leasing 101 Knowing when it makes sense to lease than own assets BY DEB SANDS W WHAT IS LEASING AND HOW DOES IT WORK? DEB SANDS is the owner and founder of Calgary-based Priority Leasing Inc. She has more than 25 years of experience in equipment leasing. Email her at [email protected]. 26 Canadian Chiropractor April 2016 www.canadianchiropractor.ca Photo credit: Fotolia hether you are setting up y our fir st clinic or have owned your practice for decades, you probably have similar concerns that keep you up at night. If you recently graduated and are working as an associate you may find yourself held back as you attempt to re-pay loans, while only dreaming of some-day opening your own clinic. If you are setting up a clinic, the ideal treatment facility you pictured in your mind may disintegrate into a far more achievable but less attractive version. And, if you already operate an established clinic, you may be looking for ways to manage your finances more efficiently, free up estab-lished lines of credit, update to the latest and most effective equipment, reduce taxes, or refresh and expand your clinic. Bottom line: keeping your practice on a strong financial footing frees up your professional capacity to deliver the best level of care. One of the tools successful businesses – including hospitals, dentists and chi-ropractors – use to streamline their business and increase profitability is equipment leasing. Companies, from single room offices to mega corpora-tions, use leasing to facilitate operations and keep their options open. A lease is not a loan so will not show as a liability on your financial statement. It’s a viable prescription that allows you to acquire up-to-date chiropractic equipment and office systems without tying up your cash or credit facilities. And structured properly, a lease pay-ment is a tax-deductible benefit. Leasing is paying for the exclusive right to use the equipment or asset of your choice, for a specified time. Ownership of the equipment lies with the leasing company. So you never own the equip-ment, unless you buy it out at the end of the lease. You can choose to allow the leasing company to take the equipment back, or buy it out – often at 10 per cent of the original purchase price. HOW CAN LEASING BE MORE PROFITABLE THAN PAYING CASH OR TAKING A LOAN TO BUY EQUIPMENT? One of the best ways to think of this is what I refer to as the “instant profita-bility strategy.” When you lease any equipment that generates revenue, it can be profitable in the very first month of the contract. When you buy, most equipment will not deliver a return on your investment for one, two or even three years. Often, by the time the equipment has paid for itself, it’s time to replace it with newer technology. This can be especially true for more sophisticated technology like
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