Budgeting for IT hardware and leasing options
Are you looking for ways to effectively manage your budgeting for IT hardware expenses? Look no further! In this article, we will discuss the importance of budgeting for IT hardware and provide you with some tips for making a plan/budget for new or replacement equipment.
Budgeting for IT hardware
As technology continues to advance, it is important to ensure that your business has the right equipment to keep up with the changes. Budgeting for IT hardware should be an essential part of your business plan, especially if you have more than a handful of computers.
Creating an IT replacement schedule can help you plan well and ensure that you have the funds when you need them. This can be done in collaboration with your IT Alliance member, who can audit your IT equipment and provide you with a list of when your equipment is likely to need replacing based on its expected life.
It is recommended to revise this asset management plan every year for budgeting purposes. By doing so, you can have a clear and actionable plan on existing equipment, when warranties expire, and the requirements for a staggered plan for new hardware.
Leasing can also be a viable option for businesses that want to stay up-to-date with the latest technology but don't have the capital to purchase equipment outright. Leasing can allow you to upgrade your equipment more frequently, reduce your upfront costs, and provide tax benefits.
In conclusion, budgeting for IT hardware is crucial for businesses that want to keep up with the fast-paced world of technology. By creating an IT replacement schedule and considering leasing options, you can effectively manage your IT hardware expenses and ensure that your business is always equipped with the latest technology.
A look at leasing
Although many clients opt to purchase outright as the overall cost is lower, leasing can be beneficial for startups, rapidly expanding businesses, or those with cash flow tied up in other areas.
Leasing can turn capital expenditure that must be depreciated into a monthly expense that can be immediately expensed. It can also keep assets off your balance sheet, which can be advantageous. However, leasing comes at a cost as you are using someone else's money, and they will charge you for their efforts. You may also choose to arrange your own finance and purchase instead of leasing, in which case it pays to research interest rates.
Upgrading your technology is vital for modernisation, expansion, and reliability. Using outdated technology can be costly, lead to wasted time, and result in expensive IT callouts. Leasing options can enable your business to move forward more quickly than it otherwise could have, financed in a way that suits your budget or cash flow.
While leasing is more expensive than buying in the long run, it can help you establish predictable payment structures aligned to your needs, making upfront payment less stressful. This means you can get the technology you need today without breaking the bank.
As one of our ITA members mentioned, leasing can be an excellent option for new startups or more mature companies. It can help save your cash for other business needs, and for mature companies, it can help with liquidity. Consult with your accountant or advisor to determine if leasing is the right option for your business.
Leasing options:
It's important to note that the leasing options mentioned in this article are not exhaustive, and our IT Alliance members are not affiliated with any of these companies. Our advice is simply a starting point, and we encourage you to conduct your own research on the subject. It's essential to read the small print carefully and thoroughly before entering into any leasing agreements.
We strongly recommend that you speak with your financial advisor and/or accountant about leasing options to determine if it's the right choice for your business especially from a tax perspective. Your financial advisor can help you understand the costs associated with leasing and the long-term impact on your business's finances. They can also help you determine whether leasing or purchasing outright is the better option for your business based on your financial goals and cash flow.
Flexicommercial
Flexicommercial is a finance company that provides flexible equipment finance solutions to businesses. Whether you are an existing business or a new start-up, Flexicommercial can help you with your financing needs.
The credit criteria for finance is dependent on a few factors such as the amount of finance required and whether you are an existing or new business.
Of course these are just suggestions and all leasing arrangements should be thoroughly considered before being entered into.
In addition to leasing equipment, it's important to note that leasing companies are often willing to include IT engineer setup costs in the value of the lease. For larger or more complex systems, this can be a significant part of the project costs, and including it in the lease can help to spread out the costs and make them more manageable. This also means that you can expense those costs as well.
To summarize, working closely with your IT Alliance member to do an audit of your current equipment and make a plan for future expenditure is a wise business decision. Partnering with an MSP (managed service provider) can also make IT budgeting more predictable and manageable, as you typically pay a fixed monthly fee for IT support. Consider leasing as an option to acquire new or replacement equipment, and consult with your financial advisor and/or accountant to determine the best course of action for your business.
Please feel free to reach out to your IT Alliance member to discuss Budgeting for IT Hardware.
IT Alliance Members:
CT Business Solutions | Hamilton | Morrinsville | Matamata-Piako | North Waikato
UltraIT | Northland | Kerikeri | Whangarei
IT Live | Auckland
Technology Partners | Tauranga
Vision Lab | Te Puke
AdvancedIT | Rotorua | South Waikato
BlackSANZ | New Plymouth | Taranaki
GTB | Wellington | Kapiti
Decision1 IT Solutions | Dunedin | Otago
IT Centre | Wanaka | South Otago
Voicecom | Invercargill | Southland
Last Updated 27/02/2023 by Dennis Jones
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