Decisions... Decisions Office Equipment Lease vs. Purchase......

Your decision whether to lease or to buy office equipment should involve much more than simply crunching numbers

When presented with the option of whether to lease or purchase a piece of office equipment many customers turn to their accountants who in turn apply a fairly standard lease/purchase analysis to the transaction. This approach takes all of the financial variables involved in an equipment lease and crunches them in relation to the variables included in a purchase option, where the buyer plans to finance the equipment using a bank loan.

For example, the factors needed to evaluate a lease would include any upfront payments or security deposits, the monthly payment, the residual value at the end of the lease, the term of the lease, as well as a discount rate that reflects the present value of money. The purchase analysis would typically include the down payment, the resale value of the equipment at the end of the note, the term, and the interest rate.

This type of analysis is intended to provide clear financial justification for the lease or purchase decision. The standard logic is that by reducing the decision into purely financial terms, the correct decision becomes self-evident. When the calculation is complete and reduced down to one number, the theory is that the lowest number—for either leasing or buying—represents the logical choice in order to acquire the equipment.

The problem with this approach however is that if a customer applies this basic accounting approach to the lease vs. buy decision, they will not be able to take advantage of many of the benefits that apply to leasing. These benefits are real and deliver significant value, even if they are not completely quantifiable in terms of a formal financial analysis.

One set of variables that should always be included in a typical lease vs. purchase analysis are the tax benefits that are realized by a customer in an office equipment lease. Even though tax benefits tend to change—at least to a degree—from year to year, at least for tax year 2013 "see section 179" those benefits are significant.

Beyond the purely financial approach to the lease vs. buy decision, it’s important to assess all of the benefits that accrue to a business when equipment is leased. From our perspective "the equipment vendor" it is important to understand and convey these benefits to customers who are considering the leasing option. 

One of the biggest benefits of leasing is convenience in the form of simplified bookkeeping and asset management. A lease is extremely convenient because everything necessary to bring the equipment online can be rolled into the contract. Consumables, service, support and maintenance, installation and training, and any other up front or ongoing expenses can typically be included in the lease program. The customer can budget for one comprehensive, fixed monthly payment instead of worrying about unexpected charges throughout the usable life of the equipment. This makes the cost of ownership both predictable and manageable instead of becoming random and out of control.

Another valuable advantage of a lease is the ability to take advantage of equipment updates and upgrades. If the manufacturer comes out with a new line of equipment that includes enhanced features and benefits, it’s a very straightforward process to upgrade a lease in order to acquire the upgraded equipment. On the other hand, owning equipment makes it far more difficult to upgrade since it must be traded in or sold, often well below it’s book value, not to mention the “hassle factor” of trying to sell used equipment. In our approved leases "the equipment refresh provision" allows us to update the equipment without the lease going full term

When evaluated from all angles, a leasing option is almost always the best approach for acquiring new—and in some cases even used— office equipment, software as well as related office equipment supplies and services. You the customer gets tremendous flexibility in terms of payment structure, technology refresh, and end-to-end support throughout the equipment life-cycle.

If you need more information on leasing your next Copier, Printer, Scanners or other office work-flow solutions contact Innovative Copy Products 410-766-0200 (Glen Burnie, MD 21061)

Innovative Copy Products is an authorized Canon and Canon ADVANCE sales, service and solutions dealer, located in Glen Burnie, Maryland