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 Cash flow can be a problem for any business that's why IT computer leasing can be an advantage as it frees up much needed cash. Instead of buying computers a business can lease them which means it spends less. A business is able to lease the IT computer equipment it needs immediately without having to pay entire costs upfront. Leasing payments are regular and allow the option to upgrade computers as technology becomes obsolete. Leasing is a financial contract between your company and a leasing company. The IT computer goods are owned by the leasing company at all times until the end of the lease when you will often have the option to buy the equipment outright. Because you are essentially renting and not buying the goods you can claim 100% tax allowance on the payment.
The Main Advantages of IT Computer Leasing are:
Cash Flow Improvement – IT computer leasing frees up cash. Leasing agreements rarely require down payments, though you may have to set aside some cash for a refundable security deposit. In comparison to IT computer leasing a loan to finance the purchase of equipment typically requires down payments of up to 25 percent or more.
Technology Rotation – IT computer leasing can mean that keeping pace with technology is easier. If your business is an early adopter and relies upon cutting-edge computer technology then IT computer leasing can be a very attractive proposition. There are a number of IT computer leasing options that even have yearly computer upgrades built into them, eliminating that difficult decision of whether you can afford to upgrade or not.
Easier to finance than purchases – Securing finance for a capital expenditure purchase, especially for a young business, can be difficult as most finance companies will usually want to see two to three years of financial records. On the other hand leasing companies, usually require only six months to a year of credit history before approving an agreement for IT computer leasing.
Better Computer Equipment – It has been recorded that IT computer leasing allows you to afford more. While you might not be able to afford to purchase that expensive state of the art computer equipment your employees are asking for, you may be able to lease it. Better computer equipment can boost productivity and improve morale.
Accounting benefits – It may be possible for a business to exclude some leased assets from its balance sheet. This could have a benefit on a business debt-to-equity ratio or earnings-to-fixed-assets ratio.
Leasing v Renting - IT computer leasing also has an advantage over renting, especially over the long-term, as this is can prove much too expensive.
Choosing the Right IT Computer Leasing Deal
Once you have looked at the advantages of IT computer leasing and taken the decision to lease then you need to find the right deal for your business. Here are some of the things you should be looking at:
Short-term Lease - If you do decide to lease IT computer equipment, keep the term short. A two year option is a good option.
Technology Rotation - A modern equipment substitution clause is a good option to negotiate. This lets you update or exchange your computer equipment so you do not end up making a purchase for potentially obsolete technology.
Cancellation Clause – It is worth ensuring that your lease agreement has a cancellation clause. Some agreements allow you to pay a fee to cancel the lease. If you take up this option then it is worth noting the cost of any cancellation penalty.
Purchase Option – You may want to purchase the computer equipment after the term of lease has ended so look for a buy option.
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