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Capital Markets

Lease costly equipment to save cash, SMEs advised

Small and medium companies have been advised to consider leasing equipment to free up cash tied in capital investments.
Small and medium companies have been advised to consider leasing equipment to free up cash tied in capital investments. FILE PHOTO | NMG 

Small and medium companies have been advised to consider leasing equipment to free up cash tied in capital investments.

Daniel Mutiso, an account manager at Rentworks, a leasing firm, said Covid-19 has adversely affected many businesses making it hard to meet operational needs.

“The best solution is to lease the equipment or service as the need arises while using excess cash to meet other necessary expenses that enable you to meet market demands,” he said in Nairobi yesterday. Mr Mutisya said many companies make major mistakes when they spend large sums of cash or borrow money to buy equipment that end up being under-utilised due to the current Covid-19 situation.

“Just like a house, one should lease an equipment or a service based on their ability to pay and that service is now available in Kenya where private and public entities lease equipment for specific uses under different models,” he said.

Mr Mutiso said the public sector leasing of motor vehicles and medical equipment has helped to improve service delivery, adding that there is need to create awareness on the benefits of leasing.

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He said leasing provided Kenyans with flexibility of acquiring equipment needed at different times where one could change their kits upon realisation it was unfit for the set task. “Say you imported a manufacturing line and realised it was the wrong equipment. You will remain with it and count losses but in leasing you have a window to change the equipment,” he observed.

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