5 Reasons Why Doctors Lease Equipment & Technology

Guest post by Nancy Maynard, Senior Vice President, First American Dental Finance 

Seeking new technology or equipment for your dental practice? With these types of projects, product selection and implementation are top priorities. However, taking time to evaluate and choose the right funding source can save your practice considerable hassle and expense down the line.

Using cash is often perceived as the fastest and easiest way to fund a project. But it could also be the costliest. How else could you use that money? Will a strain on working capital affect operations? Is this the best strategy for assets with a short useful life? With these concerns in mind, it is wise to consider how leasing may benefit your practice:

1. Achieve Beneficial Tax Treatment – True Leases are treated as rental payments by the IRS and expensed monthly on your Profit & Loss statement. Since expenses reduce net income, this can decrease your company’s tax obligation. Additionally, payments are expensed over the short term of the lease instead of a longer-term depreciation schedule, accelerating your savings.
2. Pay Less – Use a Fair Market Value lease structure to acquire new equipment and technology for less than paying outright. Since the lessor assumes a residual at end of term, the resulting sum of monthly lease payments equals less than the upfront cash price.
3. Refresh Technology – Keeping equipment on a structured renewal cycle manages obsolescence. The discipline to refresh regularly reduces down time and saves money spent on service costs.
4. Spread Out Payments – Paying over time conserves cash and daily working capital. Considering the time value of money, holding on to your cash for longer further enhances the benefit of paying for a piece of equipment over time.
5. Share Expense Among Partners – Practices with multiple doctors deal with the challenge of partners buying in and out. Leasing equipment and expensing rental payments supports a pay-for-use model so partners only pay for use of the equipment for the time they are involved in the partnership.

Each project is unique. Exploring and understanding your funding options can help you choose the ideal solution for your needs. For more information on leasing and financing, visit: www.fadentalfinance.com

Nancy Maynard is a Certified Leasing and Finance Professional who brings 12+ years of banking and finance experience to the First American team, working with dental organizations throughout the United States to offer equipment leasing and office expansion financing.