Article by Drew Coles member of the Chartered Institute of Management Accountants
Reduction in cash outflow. Where as a purchase may require a high cash outflow at the start of the period a lease will require usually a deposit with the rest of payments made monthly over the term of the lease. This can help the company regulate its cash-flow
Leasing can be cheaper than purchasing the asset outright. This would need to be summarised using the net present cost method.
Leasing can also be a cheaper form of finance as the loan section of the lease is already secured against the capital equipment.
In terms of purchasing the asset depending on the amount of capital that needs to be invested a loan will probably be required. If the business is to secure a loan, there will probably be charges that need to be placed against business assets. These can be fixed against capital assets for example or floating which can be charged against stock if the loan does not get repaid.