Acquiring assets for your business
Every company has business expenses. No matter what industry they operate in, the business must spend money in order to provide a product or service to their customers. These business expenses can be anything from staff members, equipment, logistics etc. In today’s world, businesses require the best technology and IT equipment to be successful. Employees will need the latest devices being readily available at their disposal to remain productive and efficient in their role.
When it comes to acquiring equipment and assets for the business, there are two main methods. Companies can either purchase these assets outright, or they can lease these assets over a period of time. There are many factors (such as the length of time these assets will be needed or the overall cost) a business must think about when choosing which method to take.
Leasing vs Buying
Now there are reasons for and against leasing or buying assets, and the circumstances you or your business find yourself in, or the assets themselves, may sway you one way or the other. Generally, the pros and cons of leasing and buying are as follows:
The advantages of leasing
- No upfront costs to pay.
- Good for cash flow.
- Predictable monthly expenses which help you budget more effectively.
- Gives you access to the latest assets.
The disadvantages of leasing
- Can potentially end up paying more in the long run.
- Depending on your agreement, you could be obliged to keep paying for assets long after you have stopped using them.
- Dealing with third-party finance houses (usually banks).
The advantages of buying
- Can be less complicated than leasing.
- Maintenance is entirely in your hands.
- Some equipment can be deductible for businesses.
The disadvantages of buying
- High upfront costs.
- The value of the assets depreciates over time.
- Left with outdated equipment that will need to be replaced.
Deciding whether to buy or lease can be tricky. On the one hand, owning the assets outright gives you more control, and can be more straightforward than leasing. However, the high upfront cost can make this very difficult for some businesses, and if the asset depreciates in value quickly then you can be stuck with outdated equipment that will need to be replaced. Leasing provides businesses with access to the latest equipment without the huge initial upfront cost and can be very effective for the business in the short-term. Having said that, leasing over the long-term could cause you to pay more than the asset is actually worth, and once your lease has expired you may have to return the equipment.
Leasing vs Buying IT Equipment
Now when it comes to IT Equipment, leasing provides many more benefits to buying. Traditionally, the method of securing IT equipment for a business would be to buy the devices outright, but companies have begun to realise this comes with several disadvantages:
- The latest computers and devices are expensive.
- Buying computers for your staff comes with a high upfront cost, effecting your company cash flow.
- In the computer industry things move fast. Devices are always being developed and updated, and soon the equipment you have purchased will be outdated.
- Staff having to use old devices can frustrate your workforce.
- The IT equipment you have purchased depreciates in value rapidly.
That is not to say there are not advantages when it comes to buying your devices outright. By purchasing your computers, you:
- Are not tied to a contract.
- Have full ownership of your company’s computers.
- Can use or alter the equipment however you want.
- The equipment can be added to the company’s balance sheet since its owned by you.
Benefits of leasing IT equipment
The benefits of leasing the latest devices for your business far outweigh the benefits of buying them:
- Avoid costly upfront fees for the latest tech. Agreeing to a pay monthly leasing subscription will help your business’s cashflow.
- Your funds are not invested into an outright purchase of computers, which are a rapidly depreciating asset.
- Option to return the equipment once your lease is up or extend the lease if you wish to keep using the devices.
- Leasing minimises maintenance costs of the devices.
- The lender is responsible for the machines, and warranty and technical support is included.
- Leasing can be flexible, so you can easily upgrade your equipment to the latest devices.
- Leasing is considered an operating cost and provides tax benefits.
Paying monthly for your IT equipment
Many industries now offer a subscription base model (Netflix, car rental, gaming etc.) but it particularly makes sense to do this for IT equipment. Purchasing brand new, high-end computers will be expensive. By choosing to lease your IT equipment and spread the costs instead of buying it outright, your team will have access to the latest Apple and PC devices, while your business only pays a small monthly fee!
Another benefit of leasing equipment is it helps business owners forecast the company’s expenses and budget. Instead of upfront costs, you can spread costs over monthly payments, which is great for your cashflow! This is particularly good for startup and scaleup businesses looking to avoid costly but essential outputs. Leasing your IT equipment allows your company to use the funds it raised in other key areas of the business, helping the business grow and ultimately, generate more income!
Another financial benefit of leasing IT equipment is that you may also be eligible for tax relief! Under an operating lease, you can claim full tax relief for monthly rentals and hires. Under a finance lease, you can claim full tax relief for the annual depreciation of the capitalised asset and finance charges. By being able to claim the payment as a business expense, this lowers the company’s taxable income!
This is where leasing computers instead of buying them really comes in to its own. Employees need the fastest and smartest devices available, but the latest technology can be expensive, and many businesses can find themselves priced out of the best tech for their team. When you lease a computer, you get the most up-to-date equipment for a more affordable monthly or quarterly fee. Having the newest hardware and software at all times can only benefit your business as it gives staff the tools they need to tackle their tasks efficiently.
Leasing the latest devices also helps businesses avoid another issue that occurs when buying IT equipment. The world is constantly changing due to the high rates of innovation. These new ideas bring new demands in the market, and so new devices are constantly being developed to cater to these new needs. When you purchase IT equipment, you will quickly find that these machines will be outdated, and you are left with a rapidly depreciating asset. When it is time to upgrade your IT, you will have to pay out for new machines and face the same problem all over again.
One of the trickiest, costliest parts about computers is their upkeep. Another benefit of leasing computers instead of buying them is that you receive technical and maintenance support with your machines! The business world moves fast, and if you do not have the time or the skill to fix any faults with your device, then that device may be out of action for a while, potentially causing huge problems for the business. With a lease, the lender will be responsible for maintaining the device, and will have a qualified support team to help with repairs. Not only that, but while the computer is being fixed you may be supplied with a temporary machine, so you will not be missing a machine. If the computer cannot be fixed, then you will be sent a replacement!
What happens during your lease?
IT leasing allows you to hire devices for a monthly or quarterly fee for the agreed length of contract. At HardSoft, we have several different solutions, and the terms of your lease will vary depending on your choice. For example, our Flexi-Lease and Devices for Teams solutions allow you to upgrade or change devices after a certain amount of time, and also come with the options to own your devices at the end of your lease! Other leasing options allow you to renew the contract, or you may decide you no longer need the equipment and want to return the devices at the end of the contract.
Leasing with HardSoft
We have ensured we have removed the drawbacks of leasing IT equipment, and whether its affordability or flexibility you are looking for with your lease, we can provide a tailor-made solution for your business needs. Enjoy the benefits leasing provides, without ever overpaying for your devices. Ownership of your devices at the end of your lease is available for just £1! We also offer the ability to change, add, or remove devices during your lease, so you are never stuck with old equipment you no longer need! Thanks to HardSoft Leasing, HardSoft can be the provider of your devices, as well as the finance house, so you will not have to deal with third-party finance companies!
With over 35 years’ experience in the industry, over 5000 happy customers, and a Trustpilot rating of 4.9 stars, you can rely on HardSoft to find the perfect leasing solution to your business’s IT needs. With HardSoft, leasing your IT equipment makes sense!