There have been great advancements in the technology industry over past few decades. Consumers who have been alive for the past 40 years have seen what was once considered impossible are now so prevalent they are taken for granted. Both young and older generations are affected by the perpetual growth in technology. The elders have trouble adjusting to such quick changes and the youth doesn’t know what life is like without it. We have become almost 100% dependent on computers. This is not only prevalent on an individual level but also for businesses and organizations. Companies are constantly trying to get a step up on the competition with newer more efficient technology
With so many new inventions leading to newer more advanced technology it becomes very costly for a company to afford new machines and other advanced technology and keep with the competition. With the current state of the economy and bank lending essentially frozen, it’s now harder than ever for businesses to buy the newest equipment. It takes a lot of money for a business to expand even with high profit margins. Borrowing for expansion can turn profits into deficits, if a company is lucky enough to be approved for a loan. One of the hardest and most costly aspects of running a business is updating and maintaining new technologies. With the rate of change in technology what was considered state of the art one year is antiquated the next. Keeping up with new technology can make or break a company.
The basic equipment in the technology category are new computers, computer software, telecommunications, computer hardware, and audio visual. Even the smallest of businesses need computers and basic software. To stay in the game competitively, companies need to ensure their technological equipment stays up to par with the latest technology advancements. While this may seem like common sense, achieving this goal can be extremely expensive and cut profit margins. Finding a happy medium between saving profits and spending enough to keep up with the latest technology is a hard act to conquer as a business owner.
While it would be nice to be like the Googles and Apples of the world and simply just pay for everything up front, the majority of businesses simply don’t have that kind of cash flow. While the concept is by no means new, equipment leasing is valid alternative when it comes to purchasing new technology for a business. It enables companies both big and small to purchase the latest equipment, but still keep their cash flow steady. Equipment leasing allows a company to avoid big down payments if they were to take out a loan when they decide to buy new technological equipment. When a company leases the can still get the latest technological advancements in their industry while still maintaining the cash flow to run their everyday business activities. There are also various tax benefits to equipment leasing.
Because technology continues to change so rapidly leasing makes more sense than in previous years. Leasing enables companies to acquire new equipment for a certain period of time and then give it back. Once they make all payments to the leading company as well as returned the leased equipment they can then lease the newest technological advances in their industry. This also eliminates the “buyers remorse” concept when it comes to purchasing expensive equipment. Every company tends to make some bad decisions, this hold especially true regarding the purchase of new equipment. If a business owner or decision maker makes a bad purchase they are not stuck with that machinery indefinitely. They can learn from their mistakes at the end of their lease agreement and lease better equipment in the future. At the end of the lease if the equipment proves to be successful they can then decide if they want to invest in purchasing the equipment.