Technology Leasing 101 [Free eBook]
Posted on Thu, Oct 28, 2010 @ 01:48 PM
When evaluating options for large technology procurements, there are two clear options: buy or lease.
Unfortunately, that’s where the simplicity ends. There can be a number of factors that enter into the decision of “buy vs. lease,” and having a clear understanding of each is key to making the best decision for your business.
Buying is easy. People understand buying, because we do it every day in our personal lives. Even when the subject of outright purchase versus financing over time comes into play, these are still both concepts that we have experience with and comprehend.
Leasing, on the other hand, is a complicated topic. First, there are multiple nuances and options to choose between — such as capital versus operating lease, type of partner, lease length and terms, interest rates, buyout options, and product-only versus product-service bundles, to name a few. Second, and perhaps more telling, is the simple fact that for most of us, long-term leasing just isn’t a practice with which we are familiar. It certainly isn’t as familiar as buying, anyway.
However, in conjunction with a coordinated asset management program, IT leasing can actually lower the total cost of ownership. Leasing also avoids other ownership costs such as:
- Eliminating risks and costs associated with disposing of technology assets.
- Structuring acquired IT assets as an operating expense rather than a capital outlay, generally appears more favorably on the balance sheet than obtaining budgetary approval for capital purchases.
- Off-balance sheet benefit #1 – when money is borrowed to purchase computers, liabilities are increased, impairing asset-to-liability ratios and reducing liquidity.
- Off-balance sheet benefit #2 – lease payments are generally 100% tax-deductible because they are an operating expense.
- 100% financing is normally available and lease terms can be structured beyond normally available loan terms.
To help IT professionals better understand leasing as a viable procurement option, we’ve developed Technology Leasing 101, a free, downloadable eBook.
Click here to download the free eBook (no registration).
In Technology Leasing 101, we cover all the basics of leasing so that IT professionals can make the best possible procurement recommendations for their companies.
- Chapter 1: Introduction
- Chapter 2: Leasing Vocabulary
- Chapter 3: Financing Decisions
- Chapter 4: Advantages of Leasing
- Chapter 5: Capital vs. Operating Leases
- Chapter 6: Understanding Payments
- Chapter 7: Choosing a Lease Partner
- Chapter 8: The OEM Lease
- Chapter 9: Interest-Free Leasing
- Chapter 10: Managing Lease Schedules
- Chapter 11: Managing the End-of-Lease Process
Leasing is a topic we’ve covered several times here on the blog. Due to the response to those posts, we felt it would be helpful to the community to provide technology leasing information in an organized, easy-to-reference, downloadable guide.
Do you want to learn more about technology leasing? Download the Technology Leasing 101 eBook now.
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Jeffrey Goldstein is Senior Consultant at MCPc and is responsible for the delivery of hardcopy and value-added services within the Lifecycle Management Group. Connect with Jeff on LinkedIn.
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