Financial leasing is one of the best tools of financing that plays an
important role in financing investments related to medium and small
industries which need tools and equipments and other supplies of the
industrial activity . Financial leasing offer funding for several years
to reduce the investment cost so as to start the new activity.
Accordingly the user (lessee) will have the right to use a certain asset
which is owned by lessor this is pursuant to a contract that is signed
by the two parties , and which gives one of them the right to use the
asset owned by the other party . He shall pay periodic installments for
a certain period of time . The lessee shall buy the asset from the
lessor by the end of the contract.
Advantages of Financial Leasing :
- It grants the companies the opportunity to acquire the capital assets
needed for its activity without freezing a large amount of its capital
in case it buys these assets. financial leasing grants 100 % from the
asset’s price , and that allows the company to have more liquidity used
in other activity, especially financing working capital.
- It gives the company the opportunity to either own the asset or not .
- It protects the lessee from any reduction that shall occur in the
asset’s value as a result of technological progress. It facilitates the
replacement and renovation processes.
- It keeps pace with the growing technical development that which
increases the competitive ability of the products . This is in addition
to protect the lessee from any increase in the cost of finance since
fixing the interest which represents the company revenue all along the