Industry sector:

Internet cafe: Leasing payments

You may decide to lease some items of computer equipment instead of purchasing them. The advantage of a leasing agreement is that the cost of major items can be spread over an agreed period, which will help cash flow. Also, the pace of development within the computer industry means that the latest, fastest computer of today will look very average in a couple of years time. Leasing will enable you to keep up with developments without having to spend large amounts of capital every two or three years.

Generally the payments are fixed at the beginning of the lease period and do not reflect movements in interest rates, although agreements over longer terms might include a variable rate option. Lease payments are made monthly.

Ownership of a leased item always remains with the leasing company, although you will normally be responsible for maintaining the item.

Your equipment supplier may offer leasing facilities, but if not there are a number of companies that do. Members of the Finance and Leasing Association (FLA) abide by their Business Finance Code where applicable.

Helpful guidance on asset finance and leasing is available on the FLA website.