Do you know copier equipment leasing pros and cons? They could make the difference between saving money and making a bad financial decision.
The decision to lease or purchase copier equipment is a major one. A business should first weigh merits and demerits of either leasing or purchasing. Leasing may be a favorable decision especially if the usage of the copier equipment does not justify tying up large business capital in equipment when the capital could be deployed to other uses for growing the business. Here are the pros or cons to be evaluated before you decide to lease:
Copier Equipment Leasing Pros And Cons
Leasing Enables The Business To Obtain The Latest Equipment
Copiers can become obsolete very fast with each improvement in technology. Most of the time, the leasing company will bear the burden of obsolescence and the business will be able to acquire a newer equipment assoon as the current lease expires. It is thus crucial that you keenly evaluate the leasing period so as to be able to keep up with the latest technology in the market.
Most lease rents are payable monthly but it is still possible to find other arrangements such as quarterly, semi-annual and annual payments. The predictability of expenses enables any company to budget its incomes and thus attain stable cash flows.
Keeping Up With Competitors
Use of technology in a business has the ability to introduce a competitive advantage not only making work easier but also reducing operating expenses. Certain copier machines are advanced and expensive and can give business rivals a competitive advantage. By obtaining a lease, your business may be able to keep up with other competing businesses without adversely affecting your financial position through equipment acquisitions.
Yet another advantage of leases for copiers over cash or hire purchase acquisition is that the company can obtain the equipment without making any upfront payments. This is good news for businesses with tight cash flows which would otherwise be adversely affected by large initial payments.
Cons of Leasing Copier Equipment
Higher Overall Payments
Cash purchases will always be cheaper than leasing in the long run even though the total cash payable must be available immediately. This means that a business that obtains a copier on a lease basis will have spent more by the time the lease period is over. Buying on a cash basis may therefore be preferable if the purchase cost of the item is not very significant as to adversely affect the profitability or cash flow position of the business.
Leases Are Binding Before Agreement Period Elapses
Leases are usually signed for a certain number of months or years. Before the end of this time period, the business will be obligated to continue paying for the equipment. Even worse, there may be a penalty if you decide to cancel the lease early.
This can happen even if the copier on leasehold is no longer being used. The need to abandon the equipment may be necessitated by rapid technology changes or damages that are either costly to repair or irreparable.
Leasing Is A Long And Sometimes Complicated Process
When a business representative decides to buy a copier, they will compare a few prices and choose one obtaining the equipment immediately on cash payment. This, however, is not the case with lease agreements. Lease companies may require detailed financial statements to be submitted stating clearly how the rental payments will be met and sometimes a clause on course of action should the lessee fail to meet the lease financial obligations.
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Factors To Consider Before Getting Into A Lease
Should you opt to choose leasing as a way of obtaining copier equipment or any other technological equipment, there are some factors that you need to take into account.
The first consideration is the type of lease to commit to. A capital lease is almost like a loan and the company ends up owning the asset unlike an operating lease where the rental payments are simply considered as operating expenses.
The period of the lease is also important. Longer period leases are cheaper but with a caveat, the payments will be more eventually. Also, you should determine if insurance is needed and finally the conditions and consequences for terminating the lease if need be. Other relevant factors specific to your business may also come into play.
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