The constant need to upgrade equipment is a challenge most business owners must face in today's highly competitive marketplace. In businesses with traditionally narrow profit margins, the availability of reliable, efficient equipment may mean the difference between profitable growth and stagnation.

Acquiring more advanced and more productive equipment, or simply replacing worn-out machinery, can consume significant amounts of working capital. Even assuming that financing is available for its purchase; existing bank lines are always needed for supplies or inventory, meeting payroll and tax obligations, and other temporary cash flow needs.

Bank lines are more important than ever because they may be fixed at their current levels. The price of acquiring new equipment, therefore, may include temporarily shortchanging some other area of the business. That's why many business owners are turning to leasing as a method of acquiring the equipment they need to remain profitable. And they are discovering that "strategic leasing" actually can enhance a balance sheet.

Leasing, unlike financed purchases, usually requires no initial cash outlay. What's more, the additional expenses associated with most equipment acquisitions (i.e., shipping charges, installation expense, and extended maintenance contracts) may be incorporated into the lease agreement. Instead of capitalization, the new equipment is simply another business expense on the balance sheet. Business indebtedness is not increased.