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ISSUE II 2020

Five Lease and Finance Options To Help Conserveor Even CreateCapital

Law firms are rising to the challenges laid upon them, but since 100% clarity on the future isn’t a given, they need to do so with financial flexibility and conservation of capital for future unidentified projects and circumstances. These realities align with the benefits of leasing and financing—and this is exactly what we are helping our law firm clients with right now, regardless of size, geographic presence, or practice specialty. 

Below are five lease and finance benefits that help law firms.  

1. Leverage Leasing and Financing to Improve Liquidity

Firms are leveraging leasing and financing options as the go-to strategy for firms to manage unbudgeted costs of laptops, desktops, and any variety of assets.

This extends to software as well. Financing software is a strategy that many firms can now leverage to ensure their planned or in-progress software projects remain on track and on budget. Many firms are still in the transitional phase as they migrate or upgrade their financial systems software.

Key Benefits of Financing Software to Consider

  • Monthly expense vs. total cost: monthly payments may secure a more cost-effective solution over the life of a lease
  • Spreading costs over a 36-to-60-month lease is less taxing on cash reserves, allowing partner distributions to proceed regularly
  • Software costs also carry associated soft costs that may not be factored into an outright purchase price
  • Financing terms may offer more flexibility and incorporate upgrades that would otherwise pose additional after-purchase costs 
  • Deferred payments are an option in some cases
  • Related hardware concerns. Law firms support complex information technology infrastructures and may discover that additional hardware and software upgrades are required. Leasing and financing wraps this into a streamlined package and smooths out unbudgeted expenses.

2. Lease Restructures and Onerous Terms and Conditions

Lease restructures are a time-tested financial strategy to put cash back into your firm. There are a couple of factors to consider here, one of which is whether your current lease agreements provide adequate flexibility, as well as the projected useful life of the assets.

3. Sale and Leasebacks and Tax Incentives

Sales and leasebacks is a strategy that we are working on with our clients to inject capital back into their firm from equipment they already own. This can really help offset un-budgeted expenses. One Am Law 100 client we work with was able to recently refinance their office equipment and gain $5 million back in liquidity.

Section 179 accounting rules help leasing and financing customers save money on taxes at the end of the year. This means that for most small businesses the entire cost of qualifying equipment can be written off on the 2020 tax return (up to $1,040,000.)

4. Choose a Lessor that is Able to Be Creative and Responsive

There are three types of entities that can provide your organization with lease financing:  independent lessors, captive/OEMs, or banks. 

Captive lessors will seek to maintain account and platform control which may take priority over providing flexibility and the best value to the end-user.

Banks often do not offer fair market value leases, increasing the total cost of ownership for your organization’s technology acquisitions. A well-structured fair market value lease can provide up to 15% more purchasing power than buying with cash.

An independent lessor like CoreTech, is the most unbiased financial option, as we are vendor neutral. This means your firm is in control of procurement, and you can reap the benefits of platform flexibility throughout the lease life cycle. When it comes to seeking custom solutions that optimize flexibility, an independent lessor is going to be the best choice in both the short and long term.

5. Cut Long Term IT Costs with Asset Management

Asset management platforms and user policies not only help bolster the firm’s security but also reduce the firm’s costs in the long run. Even more important than finance costs, unmanaged equipment controls can cause unexpected budget leakage.

CTOs and IT professionals can use asset management to audit in real-time the location, lease expirations, equipment users assigned to assets, and warranty-specific information that would inform better decisions from IT staff. Recovering lost assets can save you money too.

Conclusion: Flexibility is Key

These are the challenges we face now. The only thing we know with guaranteed certainty is that things will continue to change as we rise to the challenges laid before us. Great challenges are always met with great opportunities. Ensuring the firm has the flexibility and liquidity to seize the challenges when they come is an important part of the solution as every firm reaches forward to the future.
 

CoreTech Leasing

CoreTech Leasing is an independent technology and equipment lessor. Founded on over two decades of leasing expertise, CoreTech's executive team delivers over a century of experience in technology and equipment leasing and lease administration services to over 100 of the nation's most distinguished law firms. Click here for more information.

 
 
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