IT or Information technology and office equipment expenditures are almost inevitable for modern businesses today. Deciding on the right printing devices and business equipment for your company is important, especially for office equipment. Today, we will shed some light on the various factors & benefits associated with office equipment leasing.
The next question that one should ask is how the equipment gets financed after picking the right solution. Businesses have options for buying or leasing new or pre-owned office equipment. Every option comes with its own set of pros and cons related to the costs, maintenance, tax incentives, and depreciations; however, how would you know that you are getting the ideal solution at cost-effective prices for business?
Today, let us discuss the main consideration factors while leasing or buying office equipment for business. Luckily, the qualified managed service provider or MSP will offer your business with knowledge and greater insights required for picking the right equipment purchase options most suitable for your business goals, needs, budget, and, essentially, your employees.
Reasons for leasing office equipment
If you wonder about replacing your office equipment or purchasing the equipment for the initial time then you might probably wonder whether it is better to purchase the equipment outright or to opt for office equipment leasing. The following are a couple of reasons for leasing your office equipment instead of purchasing it:
- Stay updated with the recent technologies
Technological changes are happening at an astonishing rate. A piece of technology you are buying can turn from being cutting-edge to becoming obsolete even in a year.
With this being said, technology has never become an important part of business efficiency. Various advances in business technologies allow us to perform more with less.
It is why businesses cannot afford to get left behind being stuck with old and outdated technology. Your technology can become outdated every three to five years, slowly dulling within this competitive edge from the computers to the software you use, printers, and copiers.
When leasing your office equipment, you have a better opportunity to refresh and upgrade the technology daily, making you highly productive and agile each year.
- No upfront payment
It is a huge one. Everyone knows the adage, “you have to spend money to make more.” It is essential to keep money in your business’s bank account while it is all true. Going for office equipment leasing can create a huge difference between making thousands of dollars out of your pocket and the cheaper monthly costs. It means that more of your capital is available to help cover the other business expenses, mainly the unexpected ones.
- Monthly expenses are predictable.
Your expenses become highly predictable whenever you are leasing your equipment and paying a monthly price. As you purchase your equipment outright, the equipment’s cost is part of the entire cost of the ownership. Various things are considered, such as repair, maintenance, and consumable supplies.
There are times when the cost of the things such as the service and supplies gets built into the monthly costs of the equipment lease for a specific amount of time or a few specific pages so that you need not pay as required during that time.
- Getting new & sophisticated technology
It is a real fact regarding whatever they say, as you will get whatever you are paying for. It can become a struggle for a couple of businesses, mainly those that are smaller or just starting. Business owners need to make the right choices between having the ideal technology to get the job done or having the kind of technology that they afford in several cases.
Sometimes cheaper options are required to prevent you from making better progress or getting the work done with fewer errors and time. You have greater freedom to pick more productive products and highly sophisticated technology since you need not come up with the entire money at once.
- Purchase it if you like
It is good news; if you end your lease and decide that you love your equipment and do not wish to upgrade it, you can simply buy it. Mainly you can buy it at a great price. Several businesses leasing equipment will buy the equipment at the end-of-the-lease term along with leasing a new one.
It is the distinctive way to buy the equipment which you know is very cheaper with the addition of new and highly efficient equipment for your collection. It is the best option if you consider growing and needing more equipment than you did earlier.
Things to remember before picking equipment leasing
The decision to lease or buy the equipment required for operating your business has its own pros and cons. The matter is highly complex, and it is worth mentioning that one option is superior to the other across each situation. Instead, you need to find the ideal option depending on the kind of equipment you need, along with how well the equipment gets incorporated into the entire plan of your business.
These are both major topics, and we will break them down into the smaller questions that business owners should ask themselves if they decide whether to lease or buy their commercial equipment.
1. What is your current business capital
It is the initial thing you should know before making any final decisions. Attaining business equipment is no exception to this rule. Purchasing equipment for service delivery is never good if you lack the money left over for marketing your services, paying your staff, and covering other costs.
Buying your office equipment outright comes with a risk. The immediate stemming of your cash flow with such a huge one-off payment can place brakes on the growth of your business while you might get rewarded with low overheads down the line.
Consequently, if money is required to purchase the equipment outright, it would put a major dent into the budget reserved for the other areas of your business which is why office equipment leasing is the ideal option. Leasing offers you more money to fund short-term growth, even though it is mainly expensive overall. It is specifically a better option for your business to lower and stabilize your revenue.
2. When does your equipment need an upgrade?
You can pay the same irrespective of whether it delivers value to your business for 2 decades or 20 months whenever you buy your equipment. You might pay a bit of an additional charge over the same time to become more flexible with the timeframes with leasing.
Always plan your lease accordingly, and you can get away with paying for the items for only as long as you require them. In a few situations, you will find that you are paying less overall than buying. You should know the following while planning for a lease option:
- How instantly do innovations take place for your equipment
- What is the rate at which your equipment suffers the effects of wear and tear
- How are the released features across specific equipment pieces benefit your business
The other factor that one should consider is whether you are more likely to need a replacement or an update of your equipment whenever it comes to the end of its shelf life. At the same time, leasing offers you greater freedom when it comes to equipment replacement, as it might not allow you to add bespoke features to what you already have.
It is entirely up to you on the way you use it if you own your equipment. It includes the customizations that you would aim to make. The owner might prefer leasing if you know that the technology is underpinning your equipment inside out and you feel you would gain a competitive advantage by creating the bespoke tool.
Leasing is the ideal way to go if you still experiment with the tools that work best for you.
3. What is the role of equipment in your business?
Since purchasing equipment for your office involves greater risk than leasing, buying equipment that you know plays an integral role in business is always better. If you are using something daily and it becomes important for things you wish to do, it is more likely to start a purchase that pays dividends with time.
A short-term lease is better for finding out the value before undertaking such huge financial risks if the equipment in question gets acquired to increase your services portfolio or simply to experiment with the latest technologies.
You can easily purchase the equipment outright after you have established the number of commercial benefits out there.
4. Are you focusing more on growth or profit?
Leasing is specifically highly suitable for businesses focusing on growth. Leasing offers you the right set of tools to help you grow your business without causing a dent in your cash flow. It comes with its downsides increasing operational costs and reducing the scope for greater profit in the near future.
Purchasing the equipment is exactly different. Taking the cash flow hit might reduce your ability to acquire new businesses shortly; however, it allows you to maximize the marginal profits on whatever current activities you are in.
The goals of your business should help you make an informed decision regarding leasing or buying office equipment.
5. Will you sell your business in the future?
Whenever you own equipment, it attracts potential buyers to it. Buyers get more for their money if the equipment is owned. Leased equipment adds to the cost of the operations and therefore reduces the value and attraction of your business to buyers.
Consequently, it is wise to buy and own your main equipment if you prepare your business for this market, even if it is five to 10 years down the line.
Some companies are improving the return on equity by investing in the core areas of businesses instead of investing capital upfront on the equipment. A company can restrict its liabilities by redirecting its capital into earning greater returns through this approach.
At Trust Capital, we offer various office equipment leasing structures tailor-made to suit unique business needs. Terms up to 72 months and no payments for up to the first 3 months. Fast application only approvals up to $250,000. Corp only approvals if you’ve been in business over five years. Reach out to the leasing experts for proper guidance on whatever is appropriate for leasing solutions for your asset requirements.
Generally, there is not a single solution that best fits a specific business. it might vary since it depends on the industry nature, availability of funds and working capital, inherent aspects of the company, class of machinery, and business goals. Furthermore, these are the long-term decisions affecting the business’s future.