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When to buy and when to lease IT equipment
To lease or not to lease. This has always been the question and it has been coming increasingly to the fore during the credit crunch as companies look for new ways of easing their cash flow.
 


Trying to save money by freezing investment on your IT infrastructure is a false economy. As your IT equipment exceeds its economic life, the number of support calls and labour bills will only increase, costing you both financially and in terms of productivity.

So what options are there for organisations trying to invest in their IT whilst maintaining healthy cash flow? Instead of purchasing equipment and labour outright, many are now choosing leasing. With this form of finance, Delta Comtech will still supply the equipment and undertake the installation for you but when the job is finished we send the invoice to a finance house or broker instead.

If leasing is something you wish to consider, we can help you through every step of the process, including sending quotes for approval and ensuring that the finance house has all the relevant information to support your application. It is sometimes worth contacting finance brokers as they can check rates with alternative providers, although the two most popular finance houses we have dealt with in recent times have been Lombard and Bank of Scotland.

 The key advantages of leasing:
 

  • You don't have to pay the full cost of the asset up front, so you don't use up your cash or have to borrow money

  • You have access to a higher standard of equipment, the cost of which may be prohibitive if you chose to buy it outright

  • You pay for the asset over the fixed period of time that you use it, which helps you to budget for the future

  • As monthly rates on leases are usually fixed, it is easier for your business to forecast cash flow

  • You can spread the cost over a longer period of time and match payments to your income

  • The business can usually deduct the full cost of lease rentals from taxable income

  • You won't have to worry about an overdraft or other loan being withdrawn at short notice, forcing early repayment

  • If you need to upgrade or replace the equipment, you can make a small adjustment to your regular payment rather than invest a lump sum upfront

  • You can regularly purchase the equipment at the end of the lease for a further one monthly payment (please check with the lease provider to check this option is applicable)


Some disadvantages of leasing or renting equipment:
 

  • You can't claim capital allowances on the leased assets if the lease period is for less than five years (and in some cases less than seven years)

  • You may have to put down a deposit or make some payments in advance

  • It can work out to be more expensive than buying the assets outright

  • Your business can be locked into inflexible medium or long-term agreements, which may be difficult to terminate

  • Leasing agreements can be more complex to manage than buying outright and may add to your administration

  • Your company usually has to be VAT-registered to take out a leasing agreement

  • When you lease an asset, you don't own it, although you may be allowed to buy it at the end of the agreement


If you are interested in exploring leasing options to finance an upcoming IT project, please do not hesitate to contact us on 0844 4128102
 

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Delta Comtech Ltd
Artillery House, Heapy Street
Macclesfield, Cheshire, SK11 7JB

Tel: 0844 4128102
 info@delta-comtech.co.uk