New opportunities for the Swiss economy through leasing
New opportunities for the Swiss economy thanks to leasing – A growth and innovation factor for Switzerland
Companies need to be able to respond increasingly quickly to change if they are to remain economy strong and take advantage of the opportunities available to them. That is why they need to invest. Leasing enables companies to react faster to ever shorter investment cycles and rapid technological change. According to experts, Switzerland’s GDP could even increase by 1% within ten years thanks to leasing.
On average, leasing is still a less used investment financing instrument in Switzerland than in Europe. In 2015, just 6.5% of investments were financed through leasing. These figures come from the new study “Leasing for Growth”, which was conducted by the University of Applied Sciences Northwestern Switzerland (FHNW) and BAKBASEL on behalf of the Swiss Association of Leasing Companies (SAST). For Tobias Hüttche of the University of Applied Sciences Northwestern Switzerland, this is a missed opportunity. “A great potential for the Swiss economy is being missed. Instead of blocking funding for months on end, companies could use this money for research and development,” explains Tobias Hüttche.
Many companies can still largely finance themselves with their own funds. Accounting policy considerations and tax advantages are also less decisive in Switzerland than abroad. In addition, the image of leasing has been tarnished by car rental. However, leasing could do much more for companies and the Swiss economy as a whole.
Economy : allows companies to adapt quickly
In an age of rapid technological change, companies need to become more productive and operations automated more quickly. This means that digital transformation requires investment. The study shows impressively that leasing could make an important contribution to mastering these challenges.
Some of the positive effects of leasing as a financing instrument are already known, such as maintaining liquidity, optimising the capital structure, lowering capital costs, simplifying cash management and enabling investment during the growth phase. It is precisely during expansion phases that leasing becomes an interesting financing option with a more flexible credit policy, as the leased object belongs to the bank and thus represents security. Leasing also has a positive impact on prices, as leasing interest is lower than credit interest.
More room for manoeuvre in research and development
In addition to the known advantages, the study shows concrete positive effects for the development of a company. Location creates financial leeway for research and development which, according to the study, can be put to good use. This allows companies to become more flexible; they can react quickly to innovation cycles and thus avoid losing ground in technological developments.
More and more manufacturers and traders are using leasing as an additional advantage in their offer by offering their customers the possibility of linking the purchase of an asset with a financing solution. Vendor leasing also has a positive effect on turnover and becomes a real comparative advantage.
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