1 Four functions of financial leasing

1) financing function financial leasing is essentially for the purpose of financing and is produced to solve the problem of insufficient funds of enterprises. Enterprises that need to buy equipment can use the required equipment for production only by paying a small amount of money, which is equivalent to providing enterprises with a medium-and long-term loan.

2) Financial leasing with promotion function can provide financial services for production enterprises in the form of "leasing for sale". First, it can avoid excessive inventory of production enterprises, which leads to poor circulation, which is conducive to accelerating the turnover of total social funds and improving the overall efficiency of the country; Second, we can expand the sales of products and strengthen the competitiveness of products in domestic and foreign markets.

3) Investing in functional leasing business is also an investment behavior. Leasing companies have the right to choose leasing projects, and they can choose some projects with less risks, higher returns and national industries to give financial support. At the same time, some enterprises with idle funds and idle equipment can also increase their assets through financial leasing. As a means of investment, financial leasing not only makes funds special, but also improves the asset quality of enterprises and upgrades the technology and equipment of small and medium-sized enterprises.

4) Asset management function Financial leasing links capital movement with physical movement. Because the ownership of the leased property belongs to the leasing company, the leasing company has the responsibility to manage and supervise the leased assets and control the flow of assets. With the continuous development of financial leasing business, equipment manufacturers can also be used to provide special services for equipment lessees, such as maintenance, product upgrading, etc., so that they can often use advanced equipment, reducing the use cost and the risk of equipment elimination, especially for equipment with high price, strong technology, rapid intangible loss or low utilization rate.

It is precisely because of the above four functions that financial leasing closely combines industry, trade and finance, communicates these three markets and guides the orderly flow of capital. It not only provides convenience for enterprises to quickly obtain the right to use equipment with less investment, but also provides a safe lending channel for banks and other funds.

2 Main advantages of financial leasing

1) Improve the liquidity and financial situation of enterprises.

For leasing enterprises, financial leasing has some unique characteristics compared with other financing methods.

First of all, the lessee can achieve the purpose of installment payment. For enterprises, maintaining high liquidity is one of the important goals pursued by financial management. Not every enterprise can have sufficient cash and current assets, and its financing ability is also limited by many factors. Therefore, the method of improving its liquidity will be welcomed by quite a few enterprises. Because of its characteristics of installment payment, financial leasing solves the investment needs of enterprises, improves liquidity, and does not occupy too much money. It is a better way for enterprises to raise funds.

Secondly, the lessee can get tax incentives, which is an important reason why many enterprises adopt this tool. In order to encourage investment, some countries provide tax incentives for financial leasing. In the early stage of the development of financial leasing, some countries adopted tax relief policies for investment in specific fields. Through financial leasing, the lessee can directly or share the investment tax relief obtained by the lessor in a specific field.

Third, the lessee can use financial leasing to improve its financial situation. Modern leasing is characterized by innovation, and investors with different needs and preferences have created and used various leasing methods. Leaseback is one of the important ways. The lessee sells the existing assets to the lessor, and the lessor rents the assets to the asset selling enterprise. In this way, the lessee only pays the current rent, but obtains cash flow by selling assets, which improves the current cash situation. In addition, many enterprises realize off-balance-sheet financing through operating lease, which not only realizes the purpose of investment, but also improves the financial situation on the balance sheet.

Therefore, when designing capital structure and choosing financing tools, enterprises usually choose according to their own assets and liabilities, the use of financial leverage and risk. Financial leasing tools provide a better choice. In corporate financial decision-making, financial leasing is often adopted by some start-ups and small and medium-sized enterprises with insufficient cash flow and high financial risks.

2) Optimize the asset structure and reduce the risk of financial assets.

On the one hand, due to the clear use of financial leasing funds, the information asymmetry of the lessor is reduced, thus reducing the risk. Compared with bank loans, the lessor always participates in the whole process of equipment purchase, installation and use because the financial lease determines the use of funds and has been carefully evaluated in advance, so that it can master more business information of the lessee and greatly reduce the risk of the lessor. At the same time, the lessor can also use the ownership to monitor the operation of the enterprise that uses the leased equipment at any time, even if there is a risk. Because the ownership of the leased assets in financial leasing is not owned by the lessee, under the condition of perfect second-hand equipment market, part of the investment can be recovered by selling, which reduces the loss of the lessor and greatly reduces its investment risk, thus attracting a large number of financial institutions to enter this industry.

On the other hand, financial leasing companies are larger than ordinary enterprises, with better credit level and better risk management system. Banks prefer to finance from these financial leasing companies, rather than directly from ordinary enterprises, so as to optimize the asset structure of banks and reduce financial risks to a certain extent.

3) Strengthen product promotion and improve the competitiveness of enterprises.

Manufacturers promote their products by means of financial leasing, which is more conducive to the recovery of accounts receivable. Compared with other promotion methods, such as installment payment and buyer's credit, the goods sold by financial leasing have a fixed purpose because the ownership has not been transferred, so the risk is less, the future cash flow is more secure, and its installment payment and tax policy are more conducive to attracting ordinary consumers, thus realizing the sales of manufacturers' equipment and other goods, which is a favorable choice for enterprises, especially equipment manufacturers, to achieve promotion.

At present, with the increasing demand of buyers for products or services with additional financial services in the market, it is becoming a trend for manufacturers to provide customers with comprehensive products and services by investing in financial services companies, which is also an inevitable choice for manufacturers to further enhance their market competitiveness.

4) Revitalize the idle assets of enterprises and improve the utilization rate of resources.

Through leasing, idle equipment of large and medium-sized enterprises will be transferred to small and medium-sized township enterprises, second-hand equipment from developed areas will be transferred to underdeveloped areas, and resources will be transferred according to the gradient of economic development, so as to effectively use idle equipment and improve resource utilization efficiency.

For more developed areas, the upgrading of industrial structure will lead to the elimination of some equipment that still has a certain level of science and technology and can be used for production, but for less developed areas, these equipment are still quite advanced and often have preferential prices. Therefore, leasing not only solves the problem of equipment elimination caused by industrial structure adjustment in developed areas, but also solves the contradiction between scientific and technological progress and insufficient funds in underdeveloped areas, promotes the effective utilization of resources and accelerates the balanced development of the whole society. Especially as far as the actual situation in China is concerned, there is a big gap between the economic development level in the eastern coastal areas and the inland areas in the west. Second-hand equipment in the eastern areas can be transferred to the west through leasing to promote the development of the western areas.

5) Avoid trade barriers

There are certain restrictions on trade between countries. Through financial leasing, we can avoid the restrictions of direct purchase, thus breaking through trade barriers and entering circuitously. In addition, the financial control in some countries can be broken by changing financing to leasing, and the restriction of direct financing can be avoided by changing loans to financing leasing. 6) Save the construction period.

Financial leasing combines the two processes of financing and procurement into one, which can improve the efficiency of project construction. Because of the flexibility and anti-risk ability of leasing itself, it also reduces unnecessary complicated procedures in the construction process of many projects, which can enable enterprises to put into production early, see benefits early, seize opportunities and seize the market.

7) Conducive to technological transformation.

Because advanced equipment is used first, we don't have to bear the risk of outdated equipment caused by technological progress. It is very beneficial for enterprises to update technology and equipment in time, adopt new technologies and processes quickly, and improve product competitiveness and market share.

8) you can get tax incentives.

In order to encourage investment, the state provides tax incentives for financial leasing, and the depreciation of leased property can be accelerated through financial leasing projects. In fact, some taxes that should be turned over to the state are used to repay the rent, which accelerates the upgrading of equipment.