| Office Equipment Leasing Benefits By: Rich Normann | | | | is technologically obsolete much sooner than before |
| The rate of technology change is increasing, with an | | | | due to technological advances. Leasing provides built |
| emphasis on connected devices, faster system | | | | in flexibility by offering early settlement and upgrade |
| deployment and shorter life cycles. Organizations | | | | options during the lease period. |
| must find new ways to accommodate technological | | | | 6. Longer Terms- Many banks only lend money short |
| change. If done the right way, for the right reasons, | | | | term, usually 12 to 36 months. Under leasing |
| leasing can be a feasible and cost effective alternative | | | | arrangements the term can be as long as 60 months |
| to purchasing equipment, particularly in the technology | | | | and in some cases even longer. |
| arena. | | | | 7. Tax Benefits- Equipment leases are typically |
| There are several reasons to lease equipment: | | | | classified as operating leases and a lessee can usually |
| 1. Payment Reflects Usage- Businesses don't pay | | | | deduct their monthly lease payments as an operating |
| employees in advance, they pay them as they | | | | expense. This clearly reduces the net cost of the |
| contribute. It should be the same for an asset like | | | | lease. It's always best to consult your tax accountant |
| business equipment. By spreading the cost of the | | | | first; however, leasing is generally advantageous to |
| equipment over the life of the asset, it will reflect its | | | | most businesses. |
| usage. In many cases, profits generated from the | | | | 8. Easier Equipment Disposal - With leased equipment, |
| productivity of the equipment are usually greater than | | | | the vendor, as the asset owner, assumes disposal |
| the lease payments. | | | | responsibility and cost. |
| 2. Immediate Acquisition of Equipment- You can | | | | 9. Standardization- Good leasing contracts can help |
| acquire the equipment that is needed now, not when | | | | organizations standardize on particular platforms |
| the cost meets budgeting requirements. This allows | | | | quickly and consistently, resulting is savings in staff |
| you to facilitate rapid and up to date technology | | | | labor and maintenance while improving operating |
| deployment. | | | | efficiency. Total maintenance costs can often be |
| 3. Conserves Working Capital- Cash flow is king. | | | | lowered due to the standardization and to the use of |
| Capital can be employed for other profitable purposes | | | | new equipment. |
| such as buying inventory, advertising or hiring additional | | | | 10. Shift in View of Technology- Leasing often |
| personnel. When equipment is purchased with | | | | encourages viewing equipment as a business tool, |
| borrowed funds, credit lines with a lender are | | | | rather than as assets with expected longevity or as a |
| reduced. When equipment is leased, a business has | | | | personal preference for the employee. |
| in fact established an additional line of credit with its | | | | Leasing isn't for everyone. It requires a careful |
| lessor. | | | | analysis of your organizations availability of capital, |
| 4. Planned Budgeting- Monthly payments are generally | | | | administrative capacity to track equipment and deal |
| fixed for the entire term of the lease and can be | | | | with vendors, and risks associated with signing |
| made to match your cash flow. This enables you to | | | | multi-year contracts. However, leasing has become a |
| budget and manage equipment dollars for a long time | | | | very feasible and cost effective alternative to dealing |
| while eliminating budget spikes. | | | | with technology advancements and budget constraints |
| 5. Protection from Obsolescence- Today's equipment | | | | in today's business world. |
