Business Operating Lease

A rental agreement where the residual value of the asset is set at the outset, based on the estimated use throughout the term. Rentals based on the depreciation of the asset throughout the term of the agreement. The lessor holds the liability for a predetermined value for a contract period, which means lower monthly rentals.

Potential advantages of an operating lease

	Obtain equipment now without oulaying scarce capital.
	Avoid residual capital risks associated with disposal / obsolescence of assets.
	Keep pace with technology changes.
	Improve your financial ratios.
	Assists in more accurate budgeting and forecasting.
	An operating lease is usually off-balance sheet
	Obtain maximum taxation advantage by claiming the full rental as a tax expense.

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