Leasing can be a valuable tool to allow you to get your business the equipment it needs to grow, better serve your customers and continue to beat the competition.
Why lease vs. buy?
Reduce up front costs – There can be a huge opportunity cost in investing in new technology; example new laptops for the sales team or upgrading the telephone system. Ignore either, and they could have a negative impact on productivity. However, if you’re only option is to buy, you might be forced into a hard decision. Will you only be able to fund one project this year? Or perhaps you will fund both BUT what happens when the next request comes through and all of your capital is currently tied up?
Make your costs predictable – By moving equipment to your operating vs. capital budget you can eliminate delays associated with a lengthy process jockeying for capital expenditure approval. Rather than massive costs up front, you pay for the technology incrementally, enabling you to realize the return on investment (ROI) sooner.
Access to the latest technology – Sometimes it feels like technology is developing at the speed of light. No sooner do you purchase the latest and greatest, than a competitive product is released. While I consider much of the consumer electronics market noise, there are key technological advancements that will help with your business. By planning obsolescence and a technology refresh at the onset, you’ll be prepared to reap the benefits of new technology when it’s released. Depending on the type of project, ideally that could be from every 2-3 years.
Reduce your burden – When you purchase technology (asset) you assume the total burden of depreciation. You win when the asset’s lifespan exceeds the depreciation cycle (typically 5 years, but ask your accountant.) However, its a losing game if you need to replace the asset before that cycle’s complete – you’ll either be locked in to what you have OR you’ll be getting hit twice by the depreciation stick until the 1st purchase has run its course.
With leasing and a planned refresh, you can share in the cost with the leasing company. Example – new laptops. The lease could be structured so that at the end you are able to hand in the old equipment and upgrade to the new. The old equipment has residual value that was calculated into your lease and is resold.
Regardless of your project, make sure to ask about payment options from your vendor partner. In addition to the leasing options you can source on your own, your vendor partner may be able to offer alternative financing either through a 3rd party OR with a manufacturer’s special or promotion. Make sure you’re aware of all of your options, and their impact to your bottom line before running the gauntlet with a capital request.
Teltek is a Certified Avaya Business Partner, NEC Dealer, Zultys, and Microsoft Partner with two locations in the Baltimore Metropolitan area. We specialize in providing one call technology support for small to mid-sized businesses and nonprofits in Maryland, Washington, DC, Virginia and Pennsylvania.