Professional Documents
Culture Documents
Arman BALIK
2010503011
Industrial Engineering Department
Dokuz Eyll University
LEASING
Leasing is an effective investment method for
companies, especially for those growing ones, through
which they can provide medium and long term
financing to fulfill their investments.
In leasing, the equipment required by a firm is
purchased by the leasing company and then leased to
the firm, and at the end of the lease period, the title of
the equipment is transferred to the firm. Therefore,
leasing provides significant advantages to businesses
in equipment purchases.
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TYPES OF LEASING
1) Finance Leasing
2) Operating Leasing
3) Contract Hire
1) Finance Leasing
A long-term lease over the expected life of the
equipment, usually three years or more, after which
you pay a nominal rent or can sell or scrap the
equipment - the leasing company will not want it any
more.
The leasing company recovers the full cost of the
equipment, plus charges, over the period of the lease.
Although you don't own the equipment, you are
responsible for maintaining and insuring it.
2) Operating Leasing
A good idea if you don't need the equipment for its
entire working life.
The leasing company will take the asset back at the
end of the lease.
The leasing company is responsible for maintenance
and insurance.
You don't have to show the asset on your balance
sheet.
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3) Contract Hire
Often used for company vehicles.
The leasing company takes some responsibility for
management and maintenance, such as repairs
and servicing.
You don't have to show the asset on your balance
sheet.
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FACTORING
Factoring - also known as 'debt factoring' - involves
selling your invoices to a third party.
In return they will process the invoices and allow you
to draw funds against the money owed to your
business.
Essentially, these companies provide a finance, debt
collection and ledger management service.
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FORFAITING
In trade finance, forfaiting involves the purchasing of
receivables from exporters.
The forfaiter takes on all risks involved with the
receivables.
It is different from the factoring operation in the
sense that forfaiting is a transaction-based operation
while factoring is a firm-based operation: In factoring,
a firm sells all its receivables while in forfaiting, the
firm sells one of its transactions.
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FRANCHISING
Franchising is the practice of using another firm's
successful business model.
For the franchisor, the franchise is an alternative to
building 'chain stores' to distribute goods and avoid
investment and liability over a chain.
The franchisor's success is the success of the
franchisees.
The franchisee is said to have a greater incentive
than a direct employee because he or she has a direct
stake in the business.
Fast food business is a good example for franchising.
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