One of the most common questions we hear is, “Should I lease or buy my office equipment?” Well, the short answer is, “it depends.” Every business is unique, and the decision to lease or buy your computers, servers, copiers, printers, etc. is based on a variety of factors and must be evaluated on a case-by-case basis. Below are a few things to consider before deciding which option is right for you.
Advantages of Leasing Equipment
- Minimal Upfront Investment – This is perhaps the single biggest advantage of leasing your office equipment in lieu of buying it, especially for SMB’s where the strategic management of cashflow is critical to its’ overall success. Office equipment can cost thousands of dollars. Smaller companies with limited capital can minimize the upfront investment by converting these costs into a monthly operating expense.
- Access to New Technology – Technology evolves at lightning speed. Before you know it, your office equipment can become obsolete. Leasing affords you the opportunity to upgrade to newer models during your lease so that you can take advantage of the latest technology (without a financial penalty) and avoid getting stuck with outdated equipment.
- Predictable Costs – Lease agreements provide fixed costs and typically include terms for service and supplies so that unexpected issues don’t result in exorbitant fees. This makes forecasting costs easier so that you don’t exceed your budget.
Advantages of Buying Equipment
- Less Expensive – The total cost of ownership of buying your office equipment compared to leasing it is almost always less expensive because lease payments are subject to interest charges and other service fees. And unlike leasing, tax incentives often allow business owners to write-off a portion of the cost of a purchased asset.
- Full Ownership – The clearest advantage of buying instead of leasing is that you gain ownership of the asset. Although technical advances reduce the value of office equipment more quickly than other items, it may still be used longer than originally anticipated or resold for a significant price.
Which One Is Right for Me?
Deciding whether to lease or buy your office equipment requires careful consideration. Below are some initial questions to help guide you during your evaluation:
- How much free capital do you have? If the initial investment will require too much capital or have a significant burden on cash flow, leasing may be your best bet.
- How important is it for you to have new technology? Technology turns around every three to five years, and newer equipment offers better performance and reliability which many businesses rely on to stay competitive.
- What other variable may affect the TCO? Consider other intangible factors to understand the “big picture.” Weigh the risks involved with the equipment becoming obsolete or being obligated to pay for the equipment even if it is no longer needed.
Still not sure if you should lease or buy? Call us today at Xcel Office Solutions, 405-748-4222. Our specialists can help you evaluate your situation to determine which option is best for you. We’ll also help you pick the right equipment for your needs and help you determine what else you can do to help your business run more efficiently.