Rapid Technology Change Spotlights Leasing vs Buying debate
The age-old adage is that in the leasing vs buying discussion, buying is better as the asset is worth something at the end of its depreciation period. However, in software acquisition including that of accounting software, rapid technological changes and obsolescence are important variables that may change that conclusion. Availability of new technology such as cloud computing has brought the leasing vs buying debate to the forefront.
When a company considers leasing vs buying, it has to weigh the costs of capital involved in making a purchase and the leftover value of the accounting software after its useful life is over. The business does not own the asset at the end of the lease period, although there are some lease to own arrangements, and the company does not benefit from any leftover asset value.
It is necessary to consider the different costs of capital in considering leasing vs buying. Leasing includes an extra component of interest which a business does not have to pay if it makes a cash purchase.
The small business owner may be better off leasing if faced with the dilemma of leasing vs buying. There is more flexibility to leasing accounting software as the company can upgrade to new modules without having to be burdened with unwanted software. Usually, with leasing, the provider will maintain and upgrade the software as new applications are added.
By opting for leasing in the issue of leasing vs buying, the client avoids huge upfront costs and needs not worry about keeping track of new upgrades. Leasing may have the upper hand in the leasing vs buying argument if the client is unsure as to what accounting software works best for the firm, and can get out of a lease agreement when it expires.
Scalability is also the other factor in favor of leasing in the leasing vs buying discussion – if a firm is unsure how much demand it is going to have, buying extra capacity may be expensive. Leasing allows a company to scale up when the need arises.
Buying makes more sense in the leasing vs buying equation if a company plans to keep the accounting software for a very long time, if it is a very important part of operations and if it is to be integrated with the other business units of a firm. Bear in mind, there is a tax write-off from any capital equipment purchase including software acquisition, which is not available to a lease.
In the leasing vs buying discussion, some business owners prefer to have the accounting software on specific platforms on premises as there is the question of security and protection of information in leasing software.
In pondering the continuing debate of whether to lease or buy accounting software, it pays to do your research and to understand all the risks. If you would like some guidance on the options inherent to leasing vs buying, send along the form on the right with your contact details. An accounting software expert will contact you in short order for a free no-obligation consultation.
When a company considers leasing vs buying, it has to weigh the costs of capital involved in making a purchase and the leftover value of the accounting software after its useful life is over. The business does not own the asset at the end of the lease period, although there are some lease to own arrangements, and the company does not benefit from any leftover asset value.
It is necessary to consider the different costs of capital in considering leasing vs buying. Leasing includes an extra component of interest which a business does not have to pay if it makes a cash purchase.
The small business owner may be better off leasing if faced with the dilemma of leasing vs buying. There is more flexibility to leasing accounting software as the company can upgrade to new modules without having to be burdened with unwanted software. Usually, with leasing, the provider will maintain and upgrade the software as new applications are added.
By opting for leasing in the issue of leasing vs buying, the client avoids huge upfront costs and needs not worry about keeping track of new upgrades. Leasing may have the upper hand in the leasing vs buying argument if the client is unsure as to what accounting software works best for the firm, and can get out of a lease agreement when it expires.
Scalability is also the other factor in favor of leasing in the leasing vs buying discussion – if a firm is unsure how much demand it is going to have, buying extra capacity may be expensive. Leasing allows a company to scale up when the need arises.
Buying makes more sense in the leasing vs buying equation if a company plans to keep the accounting software for a very long time, if it is a very important part of operations and if it is to be integrated with the other business units of a firm. Bear in mind, there is a tax write-off from any capital equipment purchase including software acquisition, which is not available to a lease.
In the leasing vs buying discussion, some business owners prefer to have the accounting software on specific platforms on premises as there is the question of security and protection of information in leasing software.
In pondering the continuing debate of whether to lease or buy accounting software, it pays to do your research and to understand all the risks. If you would like some guidance on the options inherent to leasing vs buying, send along the form on the right with your contact details. An accounting software expert will contact you in short order for a free no-obligation consultation.
