A form of financing in which large capital expenditures are not added to the company's balance sheet throughout various classification methods. Companies will often use off-balance-sheet financing to keep their debt to equity (D/E) and leverage ratios low, especially if the inclusion of a large expenditure would break negative debt covenants.

Operating leases are one of the most common forms of off-balance-sheet financing. Meaning, the asset itself is kept back on the lessor's balance sheet, and the lessee supplies information on required rental expense only for use of the asset.