Cash and a bank loan are not the only two options available to gain access to the IT equipment that you need.
Due to the high cost of acquiring technology, leasing is fast becoming a favourable alternative to save your business money on IT costs and ensure that your equipment is always up to date.
Leasing IT equipment instead of purchasing it can make a big difference when it comes to your company’s balance sheet and income statement.
There are numerous advantages to leasing rather than buying, including saving your working capital, spending less on IT, investing in fewer depreciating assets, and scalability.
However, there are some pitfalls you need to avoid, which we have outlined below.
1. Ensure that you have the right leasing partner
Honesty and a transparent approach to business is essential when leasing is involved. The right leasing partner will make sure you save money both up front and over the lifecycle of the equipment without compromising on the integrity of the deal.
The right leasing partner will also offer you flexibility to meet your business objectives, for instance floating or fixed rates, straight or step payments and so on
For example, InnoVent, an IT equipment leasing company, offers subsidised finance, so you only pay for a portion of the equipment for the duration that you use it and InnoVent covers the rest. This guarantees their clients interest rates well below the banks.
2. Read the fine print
When you consider a lease agreement, read the T’s & C’s correctly. Make sure to look out for hidden costs such as swap out or refresh penalties, returning assets in original packaging and so on.
You also need to evaluate the end of lease process to make sure you do not fall victim to forced lease extensions and nasty surprise damage costs that could escalate overall costs.
Other things to look out for are limitations on which products and brands you are allowed to lease. While some companies may only allow you to lease their own products, InnoVent is supplier agnostic, allowing you to choose any technology hardware brand and supplier that you want.
3. Ensure you have an up-to-date asset management tool
Managing leased IT equipment throughout the life of the leased asset is essential to avoid incurring additional costs by losing or not knowing where your leased assets are.
Gartner recently stated that life cycle management practices are required to improve the return on investment for IT assets, avoid internal and external audit consequences, and adopt future technology.
InnoVent offers an in-house asset tracking system combined with asset management tools that gives clients access to lease contract asset and financial information.
For example, how many assets they have leased with InnoVent, when their next payment is due, where their assets are located, warranty status and so forth, empowering the client with complete control over their assets.
4. Ensure that your assets are insured by a reputable party
Insuring company equipment and protecting company assets is an important part of ensuring the longevity and success of your business.
This applies when leasing equipment as well, but it is important to clarify who will be insuring the assets – you or the leasing company?
InnoVent has partnered with an authorised financial service provider to provide in-house insurance guaranteeing that you have all the essentials, from the same stable.
5. Consider refresh and disposal implications
When leasing, you need to be clear on whether the provider includes disposal or logistical services.
When the lease contract comes to an end and it’s time to return the equipment for your new refresh cycle, make sure you understand who pays and takes on this responsibility.
InnoVent offers reverse logistics, collecting the equipment from your premises if you decide to return it and ensures that the correct data wiping procedures are implemented.
Furthermore, InnoVent’s unrestrictive end of lease terms, allow you to extend the lease, buy the equipment (settlement), or return the equipment if you prefer.
Key is to know that the leasing partner offers these services in house and does not rely on 3rd parties whose accountability can be a problem.
For more information, visit the InnoVent website.
This article was published in partnership with Innovent.