“Your objective is to use equipment to make money – not to own and manage equipment.” computers and laser equipment. Leas-ing “revenue-generating” equipment is a strategy you can use to realize instant profitability from when you start using your equipment, rather than after you pay the equipment off. To illustrate, consider these scenarios: Scenario 1 Clinic A spends $16,000 buying new office equipment, computers and soft-ware. They pay part in cash and finance the rest. This means they have depleted their line of available cash or credit by $16,000. If the equipment generates $1,000 of value or profit per month, it will take at least 16 months to pay off the equipment. On the 17th month the company starts making a profit on the equipment. By this time, it’s not long before the equipment is or will soon be off warranty, or will need replacing and Clinic A will have to repeat the whole cycle. Scenario 2 Clinic B leases the same type of new equipment. The lease payment is $750 per month. The company makes only the first payment upfront ($750). And, in the first month they generate $1,000 in value or profit from using the new equipment. Simple math: Profit $1,000 less costs $750 = $250 return on invest-ment in the first month. They set the term of the lease to end at the same time as the warranty ends to minimize any possible repair or servicing costs. When the lease is over, Clinic B shops for and selects brand new technology. They call their leasing representative who issues a cheque to the equipment vendor for the new equipment. Clinic B takes possession of the new equip-ment and the leasing representative has the old equipment picke up. motivates clinicians to choose leasing technology over buying is that they are always able to easily upgrade from outdated or worn out equipment to the latest technology. From iPads to high-tech chiropractic tables, you can lease any asset you need to deliver better care for your patients. And, you’ll know whether you’re approved in about 24 hours. HOW WILL LEASING AFFECT MY CASH FLOW? WHEN SHOULD YOU LEASE AND WHEN SHOULD YOU BUY? When you pay cash, you normally take money out of your available cash re-serves. Replacing equipment can stretch those valuable resources, some-times unexpectedly. And, using older equipment can result in incurring re-pair and servicing costs that would be covered under warranty if the equip-ment was new. When you lease, you free up your cash flow so you can more comfortably cover overhead costs, hire better staff, expand, advertise or ride out slower times. Buy assets that appreciate in value, and lease assets that depreciate. Owning equipment adds little or no value to your business. Your objective is to use equipment to make money – not to own and manage equipment. Owning equipment is not necessarily a bad thing. What’s not ideal is owning out-dated equipment that reduces your clinic’s profitability by incurring servic-ing costs. This can affect your profita-bility and your ability to provide opti-mum care. After a lease, if the equipment does have some remaining service life left in it, you’ll have the option of buying it out. HOW DOES LEASING MAKE IT EASIER TO MAINTAIN EQUIP-MENT AND UPDATE TO THE LATEST TECHNOLOGY? Leasing is a great way to always use up-to-date equipment. Lease until the warranty expires, then continue on to a new lease so you avoid paying for repairs and always have current equip-ment. Instead of buying and adding to your accruing debt, a competent leas-ing agent can guide you through the best possible options so you can get your doors open and fill your waiting room. • When comparing leasing companies, make sure that you are comparing apples to apples. • Fees – Watch out for “upfront” doc-umentation fees or end of lease “deregulation” fees. Know what they are from the beginning. • Buyout Terms – Understand the terms and details of the buyout clause before you sign anything. Leasing can be a financial option worth looking into the next time you see an opportunity to expand your practice or want to upgrade equip-ment and clinical settings that are so vital to the treatment you provide. To learn more about equipment leasing download your free copy of my book, Equipment Leasing Guide: Essential Facts for Canadian Business at https://PriorityLeasing. net/Guide April 2016 Canadian Chiropractor 27 HOW WILL LEASING SAVE ME MONEY ON MY TAXES? BEFORE YOU LEASE At tax time, writing off your lease pay-ments is a simple calculation: you can write off 100 per cent of your payments. When you own, you write off only the depreciation over a number of years and any interest you paid (get your calculator out). HOW DOES LEASING AFFECT MY AVAILABLE LINES OF CREDIT? WHAT CAN YOU LEASE? You can lease virtually anything you require to provide optimum care and make your practice look and feel as sophisticated as you want. What www.canadianchiropractor.ca Owning equipment reduces your cash flow and loaning money to buy equip-ment ties up your credit availability. Leasing does not tie up your line of credit. It frees it up so you can easily fund your clinic’s start up and opera-tional expenses or deal with emergen-cies. Securing an equipment lease is often easier, quicker and less intrusive than securing a bank loan. Generally a credit application and perhaps a finan-cial statement is all that’s required.
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