Leasing companies are no longer considered something exotic in the financial market. With the help of reliable leasing schemes, dozens and hundreds of enterprises acquire the equipment they need, computer equipment, tools, and so on.
Often, the acquisition of material assets through leasing is the only option for a company to finance its purchases.
Leasing schemes allow enterprises and entrepreneurs to legally lower income tax, and this is a very important factor for profitable enterprises. A leasing company, as a business, is even less risky than a credit institution.. After all, until the full payment of credit funds, the equipment belongs only to this company. When the borrower goes bankrupt, the leasing company retains material assets that can be sold and their money back. At the same time, court hearings are not required, since the transfer of these values to the borrower was not legally carried out.
However, the creation of a leasing company has certain nuances that an entrepreneur needs to be aware of before starting a business and starting investments.
The leasing company needs funds to purchase equipment in large enough volumes.
Therefore, to organize and start the work of a leasing company, amounts of tens of thousands of dollars are required. Considering that the return of leasing funds does not occur immediately, but gradually, it is clear that huge funds are drawn from circulation, which most entrepreneurs cannot afford. Therefore, it is not uncommon for leasing companies to act as intermediaries between the borrower and the bank. For banks, such schemes are beneficial in that the bank does not have to participate in the purchase of equipment, work with the customer, and look for options for suppliers. The bank, in fact, instead of working with many borrowers, works with one — a leasing company.
The most fruitful successful leasing companies exist within financial groups.
As part of such a group, a leasing company does not have to worry about sources of financing, and the bank, in turn, does not have to worry about the safety and quality of collateral. Small leasing companies are sometimes also created on the basis of an industrial enterprise that annually purchases a large amount of equipment or vehicles. The leasing company becomes, in fact, just a tool for optimizing the taxes of an industrial enterprise. Often, small leasing companies also successfully operate, which purchase running computer office equipment and then lease it to small enterprises and organizations.
The format of the leasing company, the size of the initial required funds depends on the sources of financing.
In the case of an independent company, at least several thousand dollars will be required to carry out the first leasing operations. In addition, it should be taken into account that the income of leasing companies at the first stages of the implementation of the leasing agreement is practically zero, and only by the end of the agreement, leasing payments reach maximum values and bring profit to the company. So the company needs to have a sufficient supply of cash to support the staff of the company. This period can last for several months, up to a year. If the financing is not your own, but is made at the expense of the bank, then you only need to have a reserve for the annual maintenance of personnel, as well as funds for registering an enterprise.
The profitability of a leasing company strongly depends on the number and amounts of contracts, the turnover of funds, the amount of funds invested in collateral.
Leasing companies that have existed for more than a year, as a rule, reach profitability and begin to make a profit. Of course, much also depends on the reliability of the lessee and the terms of the contract. Typically, leasing agreements have a short duration, and new vehicles and other equipment serve as collateral in leasing schemes. However, in order to minimize risks, it is necessary to provide for property insurance at all stages of the contract.
The profitability of leasing companies, ranging from 20 to 30%, is quite attractive for this market segment.
The success of a leasing company lies in the accuracy of calculations, risk optimization, and a clear business plan. We are ready to provide a detailed business plan if you place an order by filling out the form on our website.
