The next time your company needs new IT equipment or other technology items, should you “buy out right” or “lease”? If you are unsure, read on.
The Benefits of leasing are as follows:
Leasing is more likely to keep your equipment up-to-date. Computers, servers, and other technical pieces of equipment eventually become obsolete. For example if you were to lease a new Windows server over four years, at the end of that period you would be free to replace the server with a faster, newer and cheaper server (this is the reason that most companies prefer to lease cars). In the 2005 equipment leasing Association survey, 65% of respondents said that the ability to have the latest equipment was leasing’s number one perceived benefit.
Predictable monthly expenses. With a lease you have a predetermined monthly expense which can help you budget more effectively. This was perceived as leasing’s second-highest benefit.
Cash is King. Initial outlay when leasing equipment is virtually zero, which s is a great benefit for many small businesses who struggle with cash flow. You can acquire new equipment without tapping in to your much-needed funds.
Keeping up with competition. Leasing allows small businesses to acquire sophisticated technology such as new VoIP systems, faster Internet connections and more reliable IT equipment across the board. Running the latest reliable technology significantly improves your businesses performance, helping you to keep up with and overtake your competition.
The cons to leasing:
It can cost more. A leased server over a period of four years would cost more than purchasing the same server out right, as the leasing company as well as the supplier add margin on to the equipment.
The contract to pay. If for whatever reason your business changes and you no longer require the use of the equipment leased, you are still obliged to pay to the end of the lease.
The benefits of buying
It’s easy. There is a perception that leasing involves large amounts of paperwork and administration tasks, however at Custard we take the pain out of leasing plans by doing most of the work for you, however there is still more involved when leasing then when buying our right.
Corporation tax. When buying the full cost of the equipment is deductible in the first year whereas most leases can only be deducted month by month as the payments are made.
The cons of buying:
Cash flow. Businesses are required to find large sums of money to acquire the equipment, those funds could be used elsewhere such as marketing, advertising or expansion.
Outdated equipment. Eventually the technology purchased will be obsolete, companies tend to hold on to purchased equipment far longer than was initially advised by the company selling the equipment. Slow unreliable technology often holds businesses back, see our video comparing new desktop computers against five-year-old Windows XP computers – http://www.custardcomputers.com/it-hardware/xp/
If you would like to discuss the pros and cons of leasing further, please contact one of our IT gurus [email protected]
Derby – 01332289888
Nottingham – 01158559228
Lincoln – 01522775625
Chesterfield – 01246589023
Sheffield – 01142945759