Will Your Business Benefit from Leasing Tech Equipment?

Blog Author: Aaron Smith | February 17th, 2016

The next time your business needs new computers or other technology, you might be left concerned about the price that is associated with such a significant purchase. Technology is always changing; so would it be wise for your business to lease the equipment instead?

Benefits of Leasing IT Equipment
Reduces Depreciation and Maintenance Costs

Many businesses opt to pay cash up-front for technology-based equipment and IT services. However, technology changes as do your business needs, in addition IT hardware is likely to depreciate in value over time.

There are also a range of hidden costs associated with buying equipment outright, including installation of the equipment, the regular maintenance of the asset as well as the costs that occur when the equipment reaches its lifespan.

Limits risk

By leasing the necessary equipment, the ownership risk is transferred from the business owner to the lender. If any major issues occur with the equipment, it will be the owners who need to consider warranty and any associated costs.

In addition, leasing allows you the option to remain flexible with your technology options. Assuming you are not locked into a long term leasing contract, you have the option of regularly assessing your technology needs and making adjustments.

Maintains Cash Flow

Leasing helps to maintain a positive cash flow, as your business will not be required to spend a significant amount on a purchase, rather smaller amounts throughout a period of time. Start-up companies or rapidly growing companies would benefit from this option,– this way money spent on leasing the computers becomes an operating expense.

How Leasing Works

Operator leases work by the lender paying for the customer’s required equipment. The customer then agrees to lease or rent the equipment for an agreed period of time, generally a period of a few years. Once the duration of the term has lapsed, the customer has several options available to them, as described below:

  • The equipment can be returned, and exchanged for  updated models.
  • Continue the rental term on a month to month basis, taking the  time to evaluate costs, financing options and improved technologies before deciding your next move.
  • Purchase the IT equipment for market value.

or

  • Use a combination of all of the above.
Tips for Leasing IT

Described below are several useful tips to help ensure you get the most out of your IT lease.

  • Be sure to use an asset management solution that will manage your IT equipment for the entirety of its life-cycle, including removal at the end-of-life stage.
  • Take special note of return clauses and policies, as it should be simple to return the equipment.
  • Ensure the IT provider has your security in mind. Determine their policies for wiping your data upon return of the equipment.
  • Regularly review contracts to look for ways to create more flexibility from the lender.
  • Take the time to clearly understand your annual IT spending’s. An Asset Finance specialist can provide guidance and advice on the different financing options, and your accountant can help to determine what is the right choice for you.

Ultimately, the decision to either buy or lease your technology equipment will be based on your unique business. To learn more about opportunities for technology leasing and whether it will fit your unique business needs, contact Correct Solutions at +61 2 8831 8200 and talk to one of our technology and business experts.

 

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