Why the Smart Money is Financing New IT Instead of Expensing It
February 06, 2019 | Digitex
Do you need a loan to finance new technology? Have you considered financing your IT products?
Whenever a new employee starts or an existing employee’s laptop breaks down, there can be a quick jolt to your cash flow since you have to immediately buy new technology. In 2019, a laptop, productivity software like Office 365, security and backup, as well as a proactive maintenance contract, can really add up.
Have you considered financing your IT purchases? Digitex has been helping our customers grow by managing the financing of technology products since 1997. Here’s an example of what it would cost to finance technology for your business—based on a three-year term, with a $1 buyout at the end of the term.
Using a line of credit (LC) from a bank can be an option to finance equipment, but your business may need that credit line for future cash flow demands. Financing equipment may also be much cleaner from an accounting standpoint, as a three-year amortization for technology products likely matches the useful life of the asset.
When technology like laptops and mobile phones are expensed, there is often pressure to select lower cost products. In the case of laptops, there is a clear difference between what you get for less than $1000, and what you get for between $2,000 and $3,000.
Another impact of expensing technology is that there is often no preset "refresh" plan. You tend to try and extend the life of an asset for as long as possible. Every extra month is great but when they fail, the resulting information loss and employee downtime can wipe out whatever savings occurred.
Three years can also ensure operating systems and applications remain current. Older technology may not be updated by the vendor and can result in knock-on effects like security vulnerabilities and other applications not being supported.
Could your business benefit from a technology refresh and technology financing?
Digitex has over 100,000 technology products to choose from. Visit our website.
Talk to your Digitex rep today about technology financing, or click here to arrange a meeting.