Today's Facility Manager - Tricks of the Trade

Gary asks:

Does property holding (for all assets, not just buildings) tie up capital? Is renting or leasing a better solution?

James Elledge replies ...

Purchasing capital items does tie up money. Companies with excess cash will usually purchase items in lieu of leasing. If the company is short on cash or is already in debt, then leasing provides an “off-balance sheet” form of financing.

Here are some papers outlining the benefits of purchasing or leasing: Leasing Versus Buying: Which Is Better? (www.mywebca.com/infolibrary/accounting/accounting2.htm); and Leasing (www.ite.poly.edu/mg/fe620/23383992/Class12.pdf).

Thanks for your question.

Jim Elledge

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