Financing IT – how leasing can help

Regardless of the credit crunch, as a small business you will have always found yourself to be scrutinising budgets and making tough financial decisions about where and how to allocate your resources. Financial planning is a key factor in survival, and can help small and medium enterprises (SMEs) to assess cash flow and assign budgets effectively.

With most businesses reliant on some form of technology for their day-to-day operations, IT is an important area to invest in. However, if money is tight, IT purchases might be low on the list of priorities. In such cases leasing is one method of funding IT equipment purchases, by keeping money in the business rather than tying it up in depreciating assets.

There are a number of reasons to consider leasing:

  • Technological flexibility – Leasing can give you the ability to meet changing technology needs quickly and easily, without being tied to specific purchases and individual lifecycles.

  • Financial flexibility – Leasing conserves cash reserves by enabling you to acquire the equipment without making a substantial lump sum payment. It may also offer tax advantages in some cases as leasing payments may be offset against tax.

  • Managing cash flow – Payments are fixed over the agreed term of the contract, allowing you to be protected from changing interest rates, enabling accurate budgeting and cash flow projections.

  • Protection against depreciation – With technology becoming more advanced every year, it’s important to ensure you are always getting the best from your IT. Leasing can protect SMEs from equipment devaluation or obsolescence and, if relevant, a piece of equipment can be leased for a specific contract.

  • Flexibility at the end – Leasing doesn’t always mean giving the equipment back when the lease is up. At the end of the lease term, customers often have the option to purchase the equipment, renew the lease for a specific period of time or discuss a new equipment upgrade.

Many IT vendors now offer a variety of financing options, including leasing packages. However, since all businesses are different and their needs vary, there is no one-size-fits-all solution. When choosing how to finance your purchases, IT or otherwise, consider all the options and decide on the choice that best suits your company’s size, scope and budget.

About the Author: Monique Bonner