Farm tractor leasing could offer you the flexibility required to keep your business running smoothly and your cash flow carefully managed. There is no doubt about the importance of well-maintained, efficient agricultural equipment for a profitable farm. However, many agricultural businesses feel the strain when it comes to purchasing the necessary machinery for the continued maintenance of farmland. Buying farm machinery outright can place pressure on an agricultural business with stress put on cash flow and a need to release a large amount of capital when buying outright. However, the possibility of leasing farm machinery in order to free up budget and provide better access to up-to-date equipment and machinery could be the answer you’re looking for.
The Benefits of a Tractor Lease Agreement
Cash Flow & Budget Control
If you’re thinking about leasing a tractor instead of buying outright, this could leave you with a healthier cash flow. When buying outright, you have no choice but to release large amounts of capital upfront, which can be a risk to your business, especially if other vital farm equipment needs an emergency repair. Unforeseen expenditure can play a huge part in dwindling cash flow. However, with a tractor lease agreement in place, you will not run the risk of parting with funds. Instead, you will pay a small amount upfront and pay for the use of the asset over an agreed period of time, helping you to keep your cash flow healthy and your budget under control.
Access to Technologically Advanced Equipment
Leasing tractors rather than buying outright means that more up-to-date models will be available to you. Of course, this depends on the terms of your contract, but essentially a tractor lease will open up the opportunity of replacing your tractors more regularly, as at the end of your contract your will be offered the opportunity to renegotiate your terms of renewal.
This may mean you renegotiate your terms for brand new equipment. However, if you wish to retain the equipment, you may be able to structure the agreement so that at the end you have ownership. These eventualities can be discussed with your lessor and will determine which type of lease you choose. Discover more about the ins and outs of different types of lease agreements using our guide on different types of asset finance.
Financial Risks Reduced
By leasing tractors, or any other agricultural machinery, you are given the option to manage payments in line with your business’ payment cycle. This will allow you to more carefully monitor where your budget allocation is going and at what times of the month/year. If required, the lessor will also be able to provide you with additional assistance in terms of payment management – allowing you to choose the best time of the month/year to make your payments, leaving you in control of when exactly you pay for the use of the assets.
Payment management support provided by an agricultural leasing company is not the only draw. You may also be able to eliminate surprise repair costs with a fixed maintenance payment as part of your tractor lease agreement. This may require an additional cost, but it will significantly reduce the risk of any farm machinery breaking down at a time when you don’t have the budget allocated to make the repairs. With a maintenance support plan in place, you will be able to rely on your asset finance provider to take care of the repair for you – the cost of which could be built into your existing asset finance payments.
Flexible Leasing Options
Choosing where you put your cash leaves you in a much more comfortable position financially, and being able to choose when you make your payments to your asset finance provider can give you just that. You can how to structure your payments and also take control over which additional extras you require when it comes to your tractor lease, e.g. support with management of lease, and advice on which leasing option will work best for your business – finance lease, operating lease or hire purchase.
Is Tractor Leasing A Smart Move For You?
A tractor lease could potentially leave you with a much healthier cash flow, the ability to update your agricultural machinery more regularly, and a more flexible way of funding equipment. If you require further advice on leasing a tractor or any other assets that are vital for your business, take a closer look at our agricultural finance options. Alternatively, contact our team today for an in-depth discussion about your farm machinery leasing requirements.