IN any business, one the most common motoring debates amongst managers and directors is about the differences between buying and leasing cars for company use.

In order for business leaders to make an informed decision in this situation, it is a good idea to remember that the potential benefits go beyond the ability to obtain a new vehicle with a set monthly payment – there are other financial advantages when it is time to file the company accounts.

With the correct planning and car advice, a business car leasing arrangement can be put to work on a number of different levels.

One of the biggest motivations for choosing a leasing arrangement is to avoid depreciation and smooth cash flow.

To a certain extent, it is entirely true that a car’s value starts to go down from the very moment that it leaves the showroom forecourt, and obtaining a leased vehicle means that the burden of depreciation remains with the finance company.

Although this type of asset depreciation can be accounted for on your company’s balance sheet in terms of a writing down allowance, car leasing allows a business to avoid this and simply make a set amount of payments for a prescribed period of time.

Once the lease has terminated, the car can simply be returned, and the whole process can start again with another vehicle. There are no difficulties in selling the asset – that’s the job of the leasing company.