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When brothers Ken and Steve Shriber started Ditto Document Services Inc., Downtown, three years ago, they faced enormous costs for equipment.
Ditto relies on 25 high-speed color copiers that range in price from $10,000 to nearly $200,000. By leasing, the Shribers could avoid taking out bigger loans with higher interest costs.
"Our goal was to keep our costs down on the equipment side so we could be
competitive pricewise," Steve Shriber said. "If we did buy, it would be very
difficult to do that."
Leasing offers many of the benefits of buying without some of the drawbacks, industry experts say. The lessor assumes the risks of ownership, while lessees can free cash and credit for other needs thanks to lower monthly installments and the lack of a big down payment. But in order to maximize the benefits, the experts say, firms should think through their needs and consult their accountants about the finer points.
"There are financial and reporting incentives for companies to do transactions as a lease," said Bob Bernstein, managing partner at Bernstein Bernstein Krawec & Wymard, Downtown. "I think one of the things potential lessees want to be aware of is (whether) the type of lease they're thinking about doing matches their balance-sheet intentions. "
The Equipment Leasing Association of America, Arlington, Va., estimates that 80 percent of companies lease at...