Reasons Companies Lease Technology

OPERATIONAL:

Budget Management
– Lower down payment, no up-front costs
– Lower monthly budget/ expenses
– Greater control over IT budgets
– Easier administration of IT charge-backs
– Streamlined access to capital approvals
– Spending authority
– Cost constraint

Flexibility and Convenience
– Timing factors
– One-stop shopping
– Asses management
– Flexible payment options
– Control of the manufacturer
– Avoids disposal problems
– Economies of scale
– Priority delivery

Technological Change
– Technological obsolescence
– Upgrade options
– Takeouts and rollovers
– Return provisions

FINANCIAL:

Off Balance Sheet Financing
– Improve earnings
– Return on assets
– Improved financial ratios
– Stranded assets
– Reporting convenience

Financial Issues
– Lower cost alternative (lease vs. buy)
– Additional source of financing
– Less administration
– Reimbursement policies
– Takeouts and rollovers

Income Taxes
– Reciprocity of tax benefits
– Deductibility of lease payments
– Purchase penalties