There is little point in investing in dated technology, especially as a growing business if you are looking to leverage technology to fuel growth.
That's why companies looking to be prudent with their costs, opt to lease equipment rather than purchase it - less impact on the balance sheet and access to the latest in IT technology and hardware.
And equipment can be as basic for a business as a single laptop or you may have more sophisticated needs for specialist hardware or require multiple devices across your business.
Here are the basics on why leases make sense for small businesses and how they work:
Leases differ from other finance options in that the lessee (the business or individual making the regular payments) does not have ownership rights to the asset. At the end of the lease contract, the lessee is usually offered a choice of extending the lease, returning the asset, or buying the asset for a nominal fee.
At the end of a lease agreement, the ownership of the asset remains with the lessor (i.e. the company that has financed the assets for you to use). During the period of the lease you do have sole use of the asset and can within the agreed period treat the equipment as though it is your own.
For small business owners, leasing office equipment rather than buying it outright can offer a much-needed boost in the short-term by protecting cash-flows and offering a predictable level of expenses. Predictable costs will help your business meet budgets and protect funding that can be spent on simulating growth.
Leasing ensures small businesses have access to up-to-date hardware by paying a regular fee, normally charged on a monthly basis over an agreed period of time. Leasing is often a strategy used by those businesses that need niche or speciality equipment.
With a lease in effect you are the “acting” owner, and the actual owner of the asset can repossess an item should you not be able to fulfil the regular payments and fall into arrears.
Before you take the leasing route, make sure you have thought about the way in which you will use the equipment and the level of IT support you need to ensure a suitable infrastructure and servicing plan to reduce any risk of downtime.
Leasing IT means that every couple of years the specialist equipment can be swapped to the latest versions without that being prohibitively expensive.
Under a lease agreement, the lessee cannot misuse the leased assets. A clause of acceptable use is often included, so damaging the asset may mean that it is the lessee’s responsibility to maintain and repair it to a fully functioning state.
So you need to be clear on the roles and responsibilities of your lease agreement, for such hi-tech equipment it can be smarter to lease these devices rather than buy and let the supplier manage the upkeep.
Leasing allows you the flexibility to manage predictable expenses, reduce the likelihood of hidden costs and use the assets without having to plan for there return, replacement or disposal at the end of the lease term.
Can faster IT fuel growth?
For businesses in some hi-tech sectors they need cutting edge equipment in the form of processing power to meet their clients' needs, and leasing can help make the latest tech developments affordable.
Having good equipment early in the life of your business is important, as the increased speed and efficiency of hardware will help a business improve their bottom line performance without significant capital expenditure up-front.
As a small business, investing in leased equipment provides the opportunity to compete with bigger companies. Leasing all new hardware means you'll have the power to compete on level terms, and allocate funds to build momentum through marketing.
New equipment is the key to improved IT security
For small businesses, having access to up-to-date equipment also cuts the risk of data breaches, as older devices can pose a threat to security as they are more vulnerable to attack.
If you think back to 2017, NHS trusts were left vulnerable in a major WannaCry ransomware attack. A good example of what can happen when an organisation has outdated equipment and vulnerable software.
The new General Data Protection Regulation (GDPR) regulating data privacy in Europe means that data breaches can lead to serious fines.
So keep up to date with the latest equipment and software by leasing your office hardware.
As well as avoiding the risk of investing in equipment that quickly dates, there are a number of other benefits to leasing:
- Spread the predictable fixed costs over time and get the latest tech without an up-front payment
- Look with your accountant at the opportunities to maximise your tax relief through leasing
- Discuss having maintenance, repairs and servicing as a part of the lease deal
- With a lease, you pass the financial burden of obsolescence to the leasing company
- A leasing company will provide access to a wide range of the latest specialist products
- Keep pace with bigger competitors without having to invest your limited funds in capital expenditure
Worktools provides affordable plans for leasing the latest tech hardware for small and medium-sized businesses with the personal touch. Using one single IT provider for your hardware and software needs makes leasing IT equipment simple and can free up time and ensure that new systems work seamlessly.
We aim to help you save money and professionally manage your technology needs with the latest Windows and Apple devices at affordable monthly rates, with the option for IT Support plans.