Turnkey Equipment Lease
A turnkey refers to something that is generally ready for use in the sale or supply of goods and services. A turnkey equipment lease refers to the process of acquiring readily available machinery or equipment on a rental basis, whereby the ownership rests with the leasing company. This implies that the organization needs to turn the ignition key on upon receiving the equipment to make it operational. Barykina (2019) opined that l easing allows a legal organization to use the equipment without purchasing it.
Benefits of a Turnkey Equipment Lease
Tax benefits: Leasing the reusable medical equipment would bring some of the best tax deductions available for non-profit organization owners, based on the growth stimulus plans put in place by the US Government.
Delegate your assignment to our experts and they will do the rest.
Easy financing: Equipment leasing is easier to finance than loans because not all requirements are needed. Thus, processing the acquisition of the medical equipment would be faster than bank loans.
Asset management: Installation and maintenance are included on some equipment with upfront and recurring costs; for instance, the reusable medical equipment that the community health center needed.
Modern equipment: Only new equipment is leased; therefore, the non-profit community health center can get up-to-date medical equipment in the market if the board chooses the leasing option.
No down payments required: In leasing, no cash is demanded as initial payment; thus, the community health center can build its credit since it is a non-profit organization.
Disadvantages of a Turnkey Equipment Lease
First, the lessee of the equipment is not the leased asset owner; thus, the community health center would be deprived of the residual value of the medical equipment and is not entitled to any improvement made by the hospital management.
Second, the lease is non-cancellable. If the reusable medical equipment is not suitable, then the community health center would suffer since the lease involves higher payout obligations.
Third, the lessee is not free to make additions or alterations to the leased equipment. The community health center management would not be required to make any changes to the reusable medical equipment once leased to them.
Should the Board consider using a Turnkey Lease for the Acquisition of the Reusable Medical Equipment?
Yes, the non-profit community health center board would consider using a turnkey lease for the acquisition of the reusable medical equipment. After doing in-depth simple cost analysis and research, there is a greater chance that equipment leasing benefits would outweigh the loan option. The equipment leasing would allow the community health center management to obtain the reusable medical equipment without going through rigorous procedures of the loan option. So, the turnkey lease is a cheaper and faster means to acquire the medical equipment. Moreover, the health community center management would feel free from restrictive treaties and conditions such as representation on the board. Also, since the community health center is a non-profit organization and has not taken any loan, turnkey leasing would facilitate the acquisition of the medical equipment without the necessary capital outlay.
Reference
Barykina, Y. (2019). Risks of long-term leasing transactions for construction industry development. IOP Conference Series Material Science and Engineering, 667, 1-7. http://dx.doi.org/10.1088/1757-899X/667/1/012011
