Time to copy the ?copiers?
We all know the well used business term ?If it appreciates, buy it, but if it depreciates, FINANCE it?. But how well do we really understand what this means for our businesses?
Why would any financial director want a depreciating asset on his balance sheet? Whilst the commonly held view is that computers are an asset to a business, the truth is that in this highly commoditised industry, computers are about as much as an asset as a motor car ? and that?s not saying much!
Stop to ponder for a while ? that notebook you bought just 8 months ago has since been upgraded not once, but twice ? not only does the new version contain upgraded technology, but it also in all probability now costs less! We all get attached to our computers in some way or another with our little personal upgrades and software installations but in the cold hard light of day, that little piece of technology is losing value by the day ? no point at all in getting emotionally attached.
The copier industry worked this out a long time ago and has built its business model around asset finance as opposed to the IT industry, which is still primarily stuck in the ?cash time warp?. The truth is, a copier is simply a multifunction device ? the way the office automation industry bundles its services and finance options around its hardware is what differentiates them from us in the reseller channel.
Arthur Goldstuck, chief researcher of SME Survey, says the surveys done to date have not yet covered attitudes towards and awareness of rentals as a technology acquisition option. ?Anecdotally, smaller companies tend to believe that rentals on the bottom line are more expensive. Only when companies start getting larger do they start looking at the accounting treatment and possible benefits to the financial performance.?
The answer is simple, really: As soon as the inherent problems that come with owning computer equipment start to surface they will very quickly see the huge benefits in going the rental route. Once they understand the difference between operational expenditure versus capital expenditure, the tax benefit becomes immediately apparent. The myriad benefits that rental brings to the computer user, not to mention the bottom line of the business, makes it by far the best route to consider when purchasing IT equipment.
Channel Capital, as the only financial services provider that works exclusively through its reseller partners, has embarked on a major educational drive to assist its partners in understanding the critical business benefits of rental finance. For an easy matrix that breaks down the differences between paying cash and renting, please click here