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Leasing IT Equipment such as computer hardware, software, cabling and networking, new server, new laptops for the sales force, new accounting system ... it makes good economical sense. In business there are many schools of thought relating to funding and finance; "why use your own money when you can use others" is one of them and "don't buy what you can't afford" is another.

Your bank may suggest a loan, even when funds are available in your account, but why not lease?. We know car leasing is widely acceptable in Britain and in reality cars and IT equipment have one big thing in common - depreciation.

Leasing V Buying - which is best?

If we have the cash to buy IT equipment outright, we need to look ahead. It is important to protect cash in order that we may be able react quickly and take advantage of offers and opportunities that arise ... and indeed look towards the inevitable 'rainy days'. Leasing allows us to keep our cash and credit lines remain available.

Although IT equipment can be compared with company card in terms of depreciation and leasing, we can also compare our IT equipment with our staff, do we pay our employees in advance? - no, we pay people as they contribute, thus It should be no different with a contributing asset like business equipment. Leasing enables us to pay as we use it.

Imagine paying cash for a new computer networking suite and software to find it is obsolete in a very short time, let's face it - it happens! Protection from Obsolescence is paramount and today's IT equipment is technologically obsolete much quicker than other appliances and plant equipment. Just in terms of customer and staff retention, we need to update our IT equipment on a regular basis - are we cash rich enough to do this?

It is a good idea to talk with your accountant before entering into a leasing agreement; however, leasing is generally advantageous to most businesses and it has good tax Benefits - A lessee can generally deduct their monthly lease payments as an operating expense. This clearly reduces the net cost of the lease.

Without doubt cash flow is king - because of the sizable cash outlay involved in purchasing new equipment, many businesses lease to conserve capital. Money that could be used to buy stock, advertising, and hiring additional personnel are better spent rather than purchasing equipment that is worth less as time passes. If you are in a business where you have important alternative uses for cash in hand, leasing always wins out in the "lease v buy" analysis.

Hardware is fine .... it's the software!

Often we upgrade our hardware on demand, sometimes not soon enough but we replace drives, increase memory and plough on until the next crisis. Generally it is the software than needs updating or replacing, we're not talking about upgrading a notch or two but enhancing or replacing existing software. Traditionally software has been regarded as intangible in asset terms, therefore funded from internal cash resources. Hilton Charles Software Lease Plans© allow businesses to lease software only, with no hefty deposit or special charges. In their terms software leases may be for bespoke developments, business applications or software licenses.

What about IT Leasing within a phased system implementation?

Hardware installations and networking implementations don't happen overnight, in many cases we may have to begin paying way before the work has begun and indeed before the project is completed. So where a phased system implementation is in place we ought to look at a Master Lease, this is a facility that is agreed for the estimated total of the project, which means that we are able to proceed with the implementation confidently knowing the funds are available, as we need them. Within a Hilton Charles Master Lease Agreement© we have the added flexibility of selecting the term or period for the second and subsequent phases.

The key to such a Master Lease is the fact that we only pay for the amount we draw down, eg; the entire project is £75,000 but phase 1 is £30,000. We are only asked to sign off the £30,000 and we have no commitment to take the balance. It helps to avoid the large deposits associated with other funding options or those complex sale and leaseback facilities often offered by inexperienced solution funders.

Chirson. www.thewordis.com/chirson
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