Leasing Telecommunication equipment has many benefits that are not available if you buy or rent the equipment. In US alone, the size of this industry is roughly about $2,169,999,458 a year and this figure is steadily increasing.
The main reason why one should go for leasing telecommunication equipment is that there are many benefits like tax deductions, balance sheet management, flexibility, improved asset management, better cash flow, easy upgrades, and instant write offs.
Telecommunication equipment should be upgraded regularly due to constant innovations in the technology. The chances of getting stuck with outdated equipment are real if you choose to buy the equipment instead of leasing it. Due to this important reason, the telecommunication industry advocates leasing programs.
The various equipment available for leasing are: multiplexes, switches, telephone systems, voice processing hardware, transformers, and routers. The most important advantage of leasing is that a lease does not show up as a debt in the lessee’s account statement. Consequently, the financial status of the lessee improves.
Leasing any equipment helps the lessee in maintaining the financial strength of the company and thus solves the problem of working capital required for proper functioning of the organization. The internal revenue service does not treat lease as a purchase but a tax-deductible overhead expense, thus lowering the tax payable significantly.
Leasing also gives the lessee flexible payment choices and the payments can be selected according to the level of income, if the income fluctuates. Some leasing companies also help the lessee by providing them with working capital, which is roughly 50% of the net asset value leased.