Many companies are not aware of the significant benefits related to acquisition financing in computers and technology segments . The proper term for this type of financing is ' Technology lifecycle management '. Most business owners simply consider the following question : ' Should I buy or lease my firms new computers and software and related products and services ? '
Two old adages related to leasing still ring true when it comes to the technological aspect . That is that one should finance something and depreciates, and one should buy something that appreciates in value . Most business owners, and consumers as well know very well that computers depreciate in value . Systems we paid thousands of dollars for years ago are now hundreds of dollars . Walk into any ' big box ' retailer and see the dramatic moves in technology .
Business owners who finance technology demonstrate a higher level of cost effectiveness . The company wants to reap the benefits of the technology over the useful life of the asset , and , importantly, more evenly match the cash outflows with the benefits . Leasing and financing your technology allows you to stay ahead of the technology curve ; that is to say you are always using the latest technology as it relates to your firms needs .
Businesses that lease and finance their technology needs are often working better within their capital budgets . Simply speaking they can buy more and buy smarter .
Many companies that are larger in size have balance sheet issues and ROA ( ' return on assets ' ) issues that are compelling . They must stay within bank credit covenants and are measure often on their ability to generate income on the total level of assets being deployed in the company . Lease financing allows those firms to address both of those issues . Companies can choose to employ an ' operating lease ' structure for their technology financing . This is more prevalent in larger firms, but works almost equally as well in small organizations . Operating leases are ' off balance sheet ' . The firm adopts the stance of using technology, not owning technology . The lessor/lender owns the equipment, and has a stake in the residual value of the technology . The main benefit for the company is that the debt associated with the technology acquisition is not directly held on the balance sheet . This optimizes debt levels and profitability ratios .
At the end of those operating leases, which are usually 36 months long, the customer has the option of:
1. Returning the equipment
2. Buying the equipment ( not likely though )
3. Negotiating an extension of the financing for continued use of the computers, technology, etc .
Companies that have recently acquired computers and technology can in fact negotiate a' sale leaseback ' on those same assets. This financing strategy brings cash back into the company , as the firm has employed a leasing and financing strategy building on our above noted them - using technology, not owning technology .
In summary , the key benefits of computer and technology lease financing are :
* The company can stay ahead of the technology curve
* Computer leasing and financing has significant balance sheet and income statement benefits
* The firm has flexibility with respect to buying new product, returning existing technology, and generating cash flow for purchases already made
Many of the benefits we have discussed relate to leasing in general . However, technology and lease financing are very perfectly suited to the business financing strategy of leasing .
Showing posts with label Consider. Show all posts
Showing posts with label Consider. Show all posts
Wednesday, October 10, 2012
Monday, June 11, 2012
New Office Space Benefits to Consider!
A wonderful workplace need not be expensive. A great business location can help any company increase its profits and provide good benefits to the employees of this company. So what should be considered and looked for when considering some new office space?
Checklist of Items
It is difficult to look for a great business location if a determination has not yet been made by the company of the important items that need to be at the front of such a list. Listed below are some items that should be given serious consideration when looking for that next outstanding office space.
* Adequate Room - Make sure there is enough space to accommodate workers and clients in an area that allows for sufficient elbow-room' for each party.
* Budget Pleaser not Breaker Placing certain monetary constraints on how much can be spent for this office space can only be beneficial to a business and should prevent overspending for this need. Establish a set amount for the rent expense and other lease fees.
* Location - Seriously consider how much a great office address will mean to employees and clients. Give highest consideration to security, convenience and accessibility.
* Parking spaces - Parking spaces for employees and customers are a necessity these days. Be sure to find an office space that provides enough parking spaces for everyone.
* Adequate Facilities - Make sure there is adequate and working heating and air conditioning in the building. Be sure to know what other amenities will be provided by the landlord as part of the lease agreement being signed.
Considerations before Negotiations
Being equipped for lease term negotiations is very important for the tenant. Consider the items listed below before the arrival of the time for negotiations.
* Real Estate Broker - Investing time and effort in multi-million dollar commercial or industrial real estate deals can significantly impact a business. If any business is in this process, it is important to ask the agent or broker about the whole leasing process: from site selection to lease term negotiations; occupancy certificates, etc. Also ask the broker to provide as least three market surveys of similar office spaces around the area. This will provide an idea of the available office space located within the area for comparison purposes.
* Research for Hidden Costs - There are expenses that change such as property taxes, charges for common areas, maintenance fees, etc. Be sure what expenses are included in the contract for both the tenant and the landlord so hidden costs don't appear at a precarious time during the lease agreement negotiations.
* Examine Premises Condition - There are instances when the condition of the premises is not listed in the lease agreement. It is in the best interests of the tenant to have the condition of the premises included in the contract negotiations as well as to have written into the contract that any expenses for necessary repairs to the premises are the responsibility of the owner and cost for such will be deducted as incurred by the tenant from the monthly lease amount.
Expense Analysis and Decision
When all of the above information has been obtained, it should be tabulated and reviewed to prepare an overview of anticipated monthly costs for any office space being considered. Look at it monthly and compare that with projected earnings each month. This evaluation should then be compared and used to help make a final selection for new office space that will fit a projected allowance for building expenses. Hopefully, all of the above will help determine which location is the best one for you!
Checklist of Items
It is difficult to look for a great business location if a determination has not yet been made by the company of the important items that need to be at the front of such a list. Listed below are some items that should be given serious consideration when looking for that next outstanding office space.
* Adequate Room - Make sure there is enough space to accommodate workers and clients in an area that allows for sufficient elbow-room' for each party.
* Budget Pleaser not Breaker Placing certain monetary constraints on how much can be spent for this office space can only be beneficial to a business and should prevent overspending for this need. Establish a set amount for the rent expense and other lease fees.
* Location - Seriously consider how much a great office address will mean to employees and clients. Give highest consideration to security, convenience and accessibility.
* Parking spaces - Parking spaces for employees and customers are a necessity these days. Be sure to find an office space that provides enough parking spaces for everyone.
* Adequate Facilities - Make sure there is adequate and working heating and air conditioning in the building. Be sure to know what other amenities will be provided by the landlord as part of the lease agreement being signed.
Considerations before Negotiations
Being equipped for lease term negotiations is very important for the tenant. Consider the items listed below before the arrival of the time for negotiations.
* Real Estate Broker - Investing time and effort in multi-million dollar commercial or industrial real estate deals can significantly impact a business. If any business is in this process, it is important to ask the agent or broker about the whole leasing process: from site selection to lease term negotiations; occupancy certificates, etc. Also ask the broker to provide as least three market surveys of similar office spaces around the area. This will provide an idea of the available office space located within the area for comparison purposes.
* Research for Hidden Costs - There are expenses that change such as property taxes, charges for common areas, maintenance fees, etc. Be sure what expenses are included in the contract for both the tenant and the landlord so hidden costs don't appear at a precarious time during the lease agreement negotiations.
* Examine Premises Condition - There are instances when the condition of the premises is not listed in the lease agreement. It is in the best interests of the tenant to have the condition of the premises included in the contract negotiations as well as to have written into the contract that any expenses for necessary repairs to the premises are the responsibility of the owner and cost for such will be deducted as incurred by the tenant from the monthly lease amount.
Expense Analysis and Decision
When all of the above information has been obtained, it should be tabulated and reviewed to prepare an overview of anticipated monthly costs for any office space being considered. Look at it monthly and compare that with projected earnings each month. This evaluation should then be compared and used to help make a final selection for new office space that will fit a projected allowance for building expenses. Hopefully, all of the above will help determine which location is the best one for you!
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