I often get asked whether clients should buy out right or lease their computers or MFP equipment. The answer is always, it depends upon their circumstances, but there are some real advantages to leasing when considering copiers, computer equipment, software and related services.
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Stay competitive and productive - Leasing enables you to stay on top of technological advances to help you maximize productivity and effectiveness. You avoid the risks of using obsolete technology and the related maintenance issues.
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Predictable Expenses - You spread the costs of the acquisition across the time when you realize the benefits. Instead of one large upfront expense you have regular and manageable monthly or quarterly payments. There are potential tax benefits to leasing as the lease can be structured to be a straight operating expense without need for capital cost allowance.
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Lower upfront costs - You get to acquire the purchase you need now, when you need it, even if you would not be able to afford the out right cash purchase at this time. Lease financing may preserve working capital and existing credit lines for use on other opertational expenses.
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Flexible Pay Structures - Lease financing can offer flexibility that purchase does not. 100% financed acquisition with no down payment, payment deferrals or other structures to match cash flows or business cycles and varied lease end options.
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Ability to Bundle Costs - Lease financing can cover the complete cost of acquisition, including setup and installation, training, hardware, software and other services. For some systems leases may include the regular service or support fees which are needed to maintain devices. This works well if these are not highly variable and you have a reliable vendor for the service. (You don't want to bundle this type of expense if there is question about the ability of the supplier to meet the full term of the lease).
You need to understand the type of lease you are entering into when you consider leasing. This is especially important if you are talking to more than one vendor and you want to compare. Lease costs are greatly affected by the lease end options, the residual in the lease, and the terms for return of the leased products. All leases require the lessee to be responsible for shipping and delivery for returned goods and this can be costly if the depot is some distance away. In addition there are often fees at the termination which the lessee will be expected to pay. Knowing these details up front will assist in evaluating your costs properly.
One bonus reason why leases work well is they enforce a measured review of the current value of the equipment's utility at the time of lease termination. Often when companies buy their equipment there is a temptation to stretch the use beyond the intended time frame. With a lease a decision must be made when the termination is imminent.
What has your experience been with leasing? Do you lease or buy when you look at office related technologies? Share your experience below.
Lee K
