Should You Lease or Purchase That New MFP?
The same question tends to enter into the minds of SMB customers when the time comes to acquire a new digital MFP: Should the equipment be purchased or leased? This is actually in the top five of the most frequently asked questions we are asked at Digital Office Solutions as customers seek to weigh the pros and cons of each option and make the best decision for their business.
The fact that either a purchase or lease can be used as a write-off when tax season arrives doesn’t make the decision making any easier. You need to know both the benefits and the disadvantages for both sides of the process. We have outlined some of the details related to both purchasing and leasing new digital MFPs to help you better determine which alternative would best meet your needs.
Leasing Pros & Cons
- Cash flow: By leasing your new MFP equipment, you are making less of a dent in your available funds by avoiding the need to spend a large amount on a capital purchase. In addition, lease options offer different payment plans, allowing for a tolerable amount to be paid toward the use of the equipment on a time schedule that suits your financial needs.
- Flexibility: In addition to the flexible payment plans, a lease often offers provision for upgrades to respond to advances in technology and trade-in opportunities. This helps you to avoid any issues that could cause your equipment to be considered obsolete.
- Value: Once your lease term comes to an end, the residual value of the equipment tends to be higher than that of equipment that is owned outright.
- The downside: With leasing, there is the possibility that expensive penalty fees could result from any early termination of the lease. It is also a good business practice to understand the end of lease renewal terms. If the lease automatically renews how long is this for and what are the costs?
Purchasing Pros & Cons
- Less cost: An outright purchase of your new digital MFP, particularly if undertaken without any interest fees or bank loans, can potentially be less expensive in the long run when compared in a spreadsheet head to head to versus a leased piece of equipment.
- Value: Purchased equipment is not only a write-off for tax purposes, but the device also becomes a company asset.
- The downside: A major purchase that requires a large payment impacts your available finances, so you should consider how this could affect cash flow that is required for other areas of your business operations. Additionally, it may be more difficult to trade-in or upgrade your purchased equipment to keep up with technological improvements.
With the constant advances in technology, it is important to choose an option that works best for your business when deciding to lease or purchase your new MFPs. And don’t forget, no matter whether you decide to purchase or to lease, make sure you investigate what is included with the service agreement when it comes to a replacement guarantee with faulty equipment. You may be surprised at what you find out.
If you would like to learn more about which option would be best for you and how to avoid any unwanted surprises contact us at Digital Office Solutions.