RV PRO

September '14

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96 • RV PRO • SEPTEMBER 2014 rv-pro.com W hether to buy or lease equipment is a question facing many RV dealers, distributors, suppliers and manufacturers, even as credit becomes more readily available. While there is no one correct answer that fits every situation – nor every RV business – compared to the simplicity of buying, leasing is far more complicated – and may be getting even more complex. e lease accounting rules as they currently exist may be changing as a result of ongoing negotiations between the International Accounting Standards Board (IASB), which sets rules for many countries around the world, and the U.S. Financial Accounting Standards Board (FASB), which writes the rules in the United States. e proposals would require many businesses to add all but the shortest leases to their balance sheets as liabilities, much like debt. Why Lease? Equipment leasing is similar to a loan in which the lender buys and owns equipment and then "rents" it to an RV business at a flat monthly rate for a speci- fied number of months. Although lease financing is generally more expensive than bank financing, in most instances it is more easily obtained. Among the reasons given by small business owners for leasing are the ability to have the latest equipment, consistent expenses for budgeting pur- poses, help in managing company growth, and no down payment. Leasing offers real advantages, including reduced cash outflows and greater control. But that's not all. A short list of leasing advantages includes: • Conventional bank loans usually require more money upfront than leasing. • Leasing generally requires only one or two pay- ments upfront in lieu of the substantial down payments often required to purchase equipment. • Unlike some financing options, leasing offers 100 percent financing. at means an RV busi- ness can acquire essential equipment and begin using it immediately to generate revenues with no money down. • Best of all, the full cost of the equipment – as New Rules to Impact Lease/Buy Decisions While leasing equipment offers a number of benefits, new regulations regarding how the debt is reported on a company's books may make the financing option less desirable moving forward. MARK E. BATTERSBY is a freelance writer who has specialized in taxes and finance for the past 25 years. Working from Ardmore, Pa., Battersby writes for publications in a variety of fields, syndicates two weekly columns that appear in more than 65 publications and has written four books. Among the reasons given by small business owners for leasing are the ability to have the latest equipment, consistent expenses for budgeting purposes, help in managing company growth, and no down payment.

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