Buy or Lease? Answering the Age Old Question for Technology Purchases
For many small businesses, technology purchases come at the expense of other capital
improvements. Maybe you are looking to increase office space, launch a new marketing campaign or
hire a new employee. How can you manage those investments while keeping your technology
infrastructure in line with the growth of your business?
As an accounting firm, you may have these considerations for your own business or be advising your clients
on their technology purchase decisions. When determining whether to lease or buy new technology for your
office or when advising others, there are a few factors to consider.
First, when you purchase the technology, you may own it outright, but that investment is often too
large for a small business budget to handle. And there may not be the available capital you need to implement
the right IT strategy.
Second, once the purchase is made, that technology has to last a period of time in order for the company to
reap the full value. With today's technology innovations changing at a faster rate, technology can become obsolete
quickly. Purchasing the technology outright can hinder your ability to refresh and update your business'
infrastructure in a cost-effective manner.
What Are the Options
What do you do once you've decided to make a large technology investment? Small businesses generally have two
options above and beyond a simple cash purchase: Leasing or Credit. The beauty of leasing falls into three
areas — it allows you to conserve capital for non-technology purchases, operate with new technology
and shop in one place for all your technology needs.
For example, if a small business has a $5,000 first-year annual budget for new technology, they can either
buy three PCs or lease nine*. Knowing they can have more for less money enables
these businesses to invest in other areas to grow the business — be it personnel, marketing or other office
improvements. The terms of the lease are usually flexible as well, offering fixed
monthly payments across 24, 36 or 48 months, and various end-of-lease options. As you know, the lease
payment may even be tax deductible.
Leasing also allows small businesses to improve performance by instilling a disciplined technology
rotation. At the end of the lease term, small businesses replace the technology, obtain the latest
equipment and avoid technology obsolescence.
At the end of your lease, there are a variety of options to help you make the best decision for your business. In general, you can renew the existing lease, begin a new lease with upgraded technology, purchase the equipment according to the lease terms or return it.
Buying with a credit card allows you to purchase and own your equipment immediately, but doesn't offer the
benefits of leasing, including a low, fixed monthly payment spread over a term to meet your cash flow
needs. What's more, many new business owners use personal credit cards for business purchases, which could
jeopardize their personal credit should their business get into trouble. A benefit of credit is that you
can purchase on an as-needed basis, without the minimum transaction size required by most leases.
Leasing with Dell
Dell Financial Services offers a one-stop shopping experience for small business customers. You can obtain your technology and financing all in one transaction, with comparable rates, various seasonal promotions and direct customer service. Dell Financial Services offers two leasing options to best fit your business needs: Fair Market Value Leases and $1 Buy-Out Leases.
Fair Market Value Leases are best for small businesses looking for a low, fixed monthly payment and regular upgrades to the most advanced technology. This enables small businesses to conserve and budget cash flow accordingly and ensure the technology will scale with business needs. One-dollar Buy-Out Leases are better for small businesses that would like to own the technology eventually, but need to take advantage of lease options due to budget constraints. This lease provides fixed monthly payments, and the option to purchase equipment for $1 at the end of the lease term.
If leasing isn't right for your business, a Dell Business Credit Account gives small businesses a way to purchase
technology as they need it, without investing a ton of available cash. There is no minimum transaction and you have the
option to pay off the balance prior to any payment due date without additional fees. In addition, this allows you to
preserve your bank lines of credit for investments in other parts of your business. Dell also accepts all major
"We know sometimes our small business customers don't have a ton of capital to invest in technology purchases," said Robert Kalok, director of Dell Home & Small Business payment options. "That's why we've developed leasing and credit options offered through Dell Financial Services that allow them to get the technology they need now, with the option to buy later when they may have additional capital available."
Many small businesses today are evaluating leasing and credit options from their technology providers. Dell
customer Davis & Wilkerson, P.C., an Austin-based law firm, leases its
desktops, notebooks and servers from Dell with its most recent lease agreement for more than 50
OptiPlex desktops. The firm has represented major corporate, institutional, and individual clients
throughout Texas for the past 22 years and relies on a continually upgraded technology infrastructure to
best serve its clients and manage firm operations.
"I like the flexibility of leasing because I can add systems to the lease as new attorneys
join the firm or as more migrate to mobile solutions to take advantage of the productivity gains," said
Mary Smith, operations manager, Davis & Wilkerson. "Plus we're able to stay up with the latest and
greatest technology, so we can provide our clients with the most efficient and professional service possible."
For more information on the right financing option for your small business, please