Leasing: a promising financial tool for any business
In order to develop your own business and expand production volumes, in modern conditions it is worth using a variety of opportunities. Leasing is an effective financial tool that is not yet widely used in the berry business. The Ukrainian leasing market is mainly concentrated in agriculture and the transport industry. However, it is worth using it for berry growers, as this tool makes it possible to make large-scale capital investments in the development of the material and technical base of the enterprise. Pavlo Mukhin, general director of TECOM-Leasing LLC, told our publication about the possibilities of using leasing in berry growing and its advantages.
What is leasing?
This is a special type of financial activity, a kind of financial lease, when a leasing company buys an object needed by the client and transfers it for a certain period of time for a certain fee. When the term expires, the customer takes ownership of the object. The subject of leasing can be anything that belongs to the category of fixed assets, in particular, equipment used in the production process.
If compared with lending, leasing is a more accessible and simpler financial instrument. A loan can be obtained only from financial institutions, while a company only needs to obtain an appropriate license to conduct leasing operations. Accordingly, leasing terms are more flexible.
How is this tool used?
First, a purchase and sale agreement is concluded between the leasing company and the equipment manufacturer, then the contract is concluded between the leasing company and the down payment customer. Usually, the client makes a 30 percent deposit, and the leasing term is determined for a period of 1 to 7 years. The leasing company then pays the full amount to the manufacturer, which supplies the customer with the selected equipment. At the same time, warranty and service obligations are assigned directly to the client as the user of the object. All costs, including VAT, are specified in the leasing contract. These costs are fixed and predictable, making it much easier to plan for the future and protect your business from unpredictable economic fluctuations.
The payment schedule can be different: classic and seasonal schedules, as well as an annuity, are used. One of the important features of leasing is the ability to build a payment schedule in accordance with the client’s cash flows and income, especially considering that the main season for berry growers lasts only about 4 months a year. You can choose any currency for leasing, but lately leasing companies are focusing more on the hryvnia.
What are the advantages of leasing?
If banks provide loans only for existing items or objects, then the leasing company can finance even things that are outside the territory of Ukraine and will be imported later. Another significant advantage is receiving equipment maintenance, which is included in the total cost. The lease payment does not change throughout the term of the contract. At the same time, the debt for leasing transactions is not reflected as credit debt, but is noted in the balance sheet as an investment. Accordingly, this does not limit the possibility to carry out other credit operations in parallel. In addition, the client has the opportunity to receive a vacation upon repayment of the leasing body for the period as long as the object is imported, delivered or put into operation. After all, the use of this tool allows you to quickly return the invested finances, because the selected equipment is used and brings profits during the entire period of the leasing agreement.
Why is leasing a promising tool for the berry business?
The possibility of leasing equipment opens up great prospects for berry growers. After all, leasing allows you to get, at an affordable price, access to the technology that is best suited for your business. New technologies are usually more economical to operate, so a leasing agreement will help take advantage of these high-quality assets. Our company has already implemented a project related to the berry business: we imported UNIDEX shock tunnel equipment. It included a fluidization freezing tunnel and refrigeration equipment. The equipment was delivered from Poland and leased for 5 years.
So, since the provision of high-quality storage, freezing, processing is of great importance in the berry business, it is worth paying attention to the opportunities that leasing opens, both for beginners and those who want to expand their business.
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