There are lots of reasons to lease office furniture. For example, sometimes investing in lots of furniture, especially in these uncertain times, is not in the company's budget. When staff are seasonal or flexible, then there is a need for furniture but only on a temporary basis. Start-ups might need to be less rigid in order to expand or contract quickly in the early days. So it can make a lot of sense to use office furniture leasing to meet the company's needs.
Setting up a new office can be very expensive and time consuming, but leasing companies can make the job much easier. Hanging on to your capital is not a bad idea and you can buy your office furniture gradually on a lease. Leasing office furniture can work out a lot cheaper in the long term as well as having a number of other financial advantages.
Leasing means that you can get the furniture you need rather than be constrained by a tight budget. You can spread your payments over 2, 3 or 5 years, paying a fixed monthly payment that you can budget for. Usually you need to pay a nominal security deposit and can customise your repayments to suit your budgeting: for example making monthly, quarterly, even annual payments. Leasing avoids the problem of depreciation as when the lease runs out, you can start again, equipping your offices with modern and new furniture.
Leasing generally enables you to afford more and better furniture. Though you might not be able to afford the most expensive and stylish furniture if you were buying outright, by leasing you get much more for your money. This can help boost morale and productivity.
Leases are much easier to finance than purchasing furniture outright. To get a loan to buy furniture, banks generally require two or three years of financial records, which if your company is a start-up, might not be available. Leasing companies usually only need six months to a year of credit history before giving the go ahead for a furniture lease.
Cash flow
Another advantage of leasing is that cash isn't tied up in the overhead of furnishing your office. It is available for investing. Leasing is also cheaper than a bank loan. Rather than spend the money on office furniture, you can use the capital for other things. Whilst you could buy the furniture you need outright, it can be more cost effective to lease it.
Flexible
You can add further furniture to your lease at any time, simply increasing the repayment term if you don't want to pay more each month, or just increase your monthly payment and end the lease at the original end date. Leasing allows you to manage future obsolescence against your current requirements as it is easier to swap out furniture and adapt to change and growth in the business.
Start-ups
With a start-up, many owners may be reluctant to invest too heavily on office furniture given all the costs of starting a new business. As well as cost savings by leasing furniture, the start-up can be flexible and easily add furniture as it grows. Leasing means that better quality furniture is much easier to afford, giving the office a better appearance.
Tax advantages
The repayments on the lease of the furniture are 100% tax allowable which makes it a cost effective way to finance your office furniture. If you were to pay for it in cash, then only a proportion would qualify for tax purposes (about 65%), but by leasing it you can claim the full amount that you pay. This makes leasing a more tax efficient option.
When your lease ends, you either rent the furniture at a low monthly rate or you can make a one-off payment that to give you use of the furniture for its lifetime.
Some companies can offer leasing from as little as one month's rent in advance, spreading the lease over a period of up to five years. Two years is recommended and also if you can agree on a 'substitution' clause that enables you to update or exchange furniture and equipment as and when necessary, then you can protect your business from things becoming obsolete. Make sure that you have a cancellation clause so you can pay a fee to terminate the lease (make sure to note any cancellation penalty).
If you want to buy the furniture at the end of the term of the lease, make sure that you have the option to do this. It is usually possible to buy the furniture for a nominal amount, typically equivalent to maybe one additional rental payment. The sort of furniture that is leased includes tables, reception furniture, partitions, board room furniture, lounge and waiting area seating, executive chairs, ergonomic seats, desks, filing cabinets and display units, workstations and so on.
An article written by Marianne Heredge on behalf of www.perfectconcepts.co.uk who offer specialist services in leasing office furniture.
