The Benefits of Sourcing IT Equipment Through Leasing
If you lease IT equipment, then you will be well aware of the threat of technical obsolescence. With technology advancing and evolving on what seems like a weekly basis, what was once the next best thing can very quickly become yesterday’s news.
So what does that mean? Should businesses not invest in technology and IT equipment? Do companies have to spend a lot of money on IT assets, that have a considerable effect on their cash flow and hope that a newer, better and more advanced version doesn’t come out soon? Purchasing is not always the most cost-effective option and can put many companies off attaining the equipment that can advance their operations and core business.
However, there is an alternative – Leasing.
There are numerous benefits to leasing IT equipment as opposed to purchasing, but especially when it comes to potential wastage and obsolescence associated with IT procurement.
Leasing is a long-term agreement regarding the usage and financing of a particular asset. However, unlike buying, leasing has the option to be more flexible. Buying consists of one large payment and complete transfer of ownership and asset, leaving a big mark on your cash flow. Leasing spreads the costs across the useful life of the asset, and as obsolescence is a factor affecting the longevity of an asset’s usefulness, this is taken into account. Many lessors offer the option to upgrade the technology during the lease, simply revising some of the terms and documentation. This is an option that should be negotiated and considered carefully, with a leasing expert on board to help ensure a smooth transition that is not only cost-effective, but reduces the pressure of having to settle with outdated technology.
Asset Disposal and Renewability
Hang on! If it becomes a lot easier to update technology during a lease and more businesses are able to substitute older equipment for newer assets, what happens to all the discarded equipment? One of the benefits for companies that lease their assets is that they relinquish ownership. This means it is the lessor who is responsible for disposing of or repurposing old equipment. Most lessors are better prepared to deal with the ethical and correct methods of disposal of equipment; they have experience and knowledge with the WEEE directive or which elements can be recycled. Similarly, if you are leasing from the manufacturer, they will have a much better understanding on how the asset can be repurposed to avoid wastage.
Sale and Lease Back Existing Assets
Already spent the money on procuring the asset? You may now be kicking yourself at the thought that you could have reduced the damage to the cash flow by choosing to lease rather than outright buy, but not all is lost. Some lessors offer an option known as sale and lease back, wherein they will effectively finance the asset by buying it from you. Once ownership has been transferred, the asset can then be leased back to you and you can use it much like you already were. Not only does this free up cash tied into assets, but it also allows you to relinquish ownership of the equipment and in doing so alleviate some of the commitments that previously held you back.
Clearly, there are numerous benefits when choosing to lease IT equipment. If you would like more information on how Innervision helps our clients secure the best leases and effectively manage their lease portfolios with our cloud-based leasing software, LOIS, give us a ring on +44 (0) 20 7283 9422
For more information on leasing and how to get the most out of it, download our introductory guide for lessees – The Bumper Book of Leasing Basics. Just follow the link below:
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