Every business organisation has a keenness to save the money by cutting down on unnecessary or avoidable costs. Where buying a new office equipment like a photocopier is a big and important decision affecting the budget and the cost of operation of the company.
The best alternative to cut down cost of purchasing a photocopier is to acquire it through a lease agreement. Let’s compare the following basis of difference:
- Initial Cost. The decision of purchasing equipment leads to a huge initial capital requirement for utilizing the services of the same. Whereas when you decide to make a lease agreement for the same equipment, you are saved from a big amount of capital being stocked up which otherwise could be used for expansion purposes of your business.
- Obsolescence cost. When you purchase a photocopier, you always have a fear of the technology being outdated or turning obsolete within a period of 2-3 years after purchase. With the advancement in technology every off and then, this adds up as a burden to the business in form of cost of obsolete machinery. On the other hand if you choose lease agreement this fear and cost of obsolescence will not hit your business operations as you can utilize the latest technology for as long you want and can easily shift to updated versions during the lease agreement only.
- Individual cost. Buying a photocopier alone will prove to be a futile decision when you will realise that you could have leased a multifunctional photocopier rendering the services of scanner, photocopier, Printer as well as a fax. Leasing multifunctional equipment is far more productive than buying single functional machinery.
- Tax costs. Purchasing equipment can offer you to get depreciation of just up to 40% of the cost of equipment in initial year and 25% in succeeding years. But when we talk of deduction of amount paid as leasing installment, full amount is deductible as a business expense thereby lowering the overall cost of leasing.
- Arrangement costs. Outright purchase of photocopier puts a lot of burden on the business and even arranging the amount for purchase either by forgoing another business expansion or in form of loan from the bank leads to high arrangement costs. But in case of leasing there is negligible cost of arranging the funds as you ink the agreement as per your own convenience for a stipulated period of time that is most suitable to you.
- Maintenance & Repairs Cost. The cost of maintenance and repairs in case of purchasing have to be borne by the purchaser but in case of lease these cost are already covered and are not to be borne by the lessee.
- Supplies cost. Same as maintenance and repairs cost, the cost of supplies like toner and ink are to be borne by the purchaser but these costs are not to be incurred by the lessee of his own.
Leasing is helping out companies to cut down the costs of investment, obsolescence and maintenance costs. Not only cutting down costs, leasing is far more affordable, convenient and tax efficient way to utilize the latest technology with an option to easily shift to the upgraded model.