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Lease or Buy – Which Way for Office Equipment Procurement? (Page 1 of 2)
On the subject of how best to acquire office equipment and supplies, for the small to medium sized business enterprise the first step must always be to contact a financial adviser to discuss how best to make the acquisition. In this summary, however, I offer some pointers to outline possible routes to a cost-effctive acquisition. Outright purchase or leasing are broadly speaking, the usual choices, with hire-purchase schemes making a third route to explore.
Purchasing an asset is nearly always the most convenient method of acquisition. However, in some cases, especially for some high-end multifunctional office equipment purchases, purchasing may be seen as impossible because of lack of funds in the current finacial year, or in any case a high cost which discourages those all-important upgrades toward a more efficient, productive business.
However, many companies have found that Leasing becomes a favourable option, if necessary by funding from an agreed budget deficit against under spending in future years. Several options now exist where leasing can provide the best overall value for money.
To expand on this, some different ways of obtaining higher-cost equipment are outlined below. This is a brief summary only, designed to assist with conversations with suppliers or with internal finance departments.
Office Equipment Leasing vs. Hiring or Rental
The Equipment Leasing Association defines a lease as “A contract between lessor and lessee for hire of a specific asset selected from a manufacturer or vendor of such assets by lessee”. In this scenario, ownership stays with the lessor. The lessee has possession and use of the goods over a period on payment of the specified rentals.
This system is different from hiring (including rental and contract hire). Hiring requires the user to select from specialised stock already held by the hiring organisation which usually charges a fixed tariff. Leasing enables the user to select the goods from a manufacturer or other supplier of the required goods.
A lease is negotiated usually on terms specific to the deal, with the lessor. The lessor acquires the goods chosen by the lessee. Uniquely, this can allow the lessee to use the goods by making payments out of revenue. Office equipment (including photocopiers and fax machines) and furniture, cars and commercial vehicles, computers, machine tools, laboratory equipment and contractors’ plant are allcandidates for leasing.
Some Advantages of Leasing:
– All costs are fixed in advance, so budgeting is exact – Goods cannot be wihdrawn once the contract is signed (as long as agreed conditions are complied with. – Removes the need to tie up capital. – Allowances, depreciation and other calculations are not required – Leasing is simply about the rental cost. – Leasing releases capital which may not be available elsewhere. – Leasing is inflation-proof as payments are made out of future funds, in fixed money terms. Hence real costs fall against any inflation. – Possibility of immediate use of cost-saving equipment.
Troubles in Mineral Rights Leasing
There many potential troubles when you are involved in mineral rights leasing. This is understandable as mineral rights leasing isn’t exactly a simple transaction. There are a lot of areas to cover and be clear with. Still, even if you have given your best in the negotiations and shaping of the deal, problems and arguments may still arise in the future.
One such potential problem would certainly be concerning the legal procedures. This is not surprising since mineral rights leasing involves a lot of research, corrections, and transactions in order to be completely clear to all parties involved. In this regard, the contract or mineral rights leasing agreement is very important. The wording in the contract has to be agreed upon by all parties in order to avoid future arguments. The contract will be your basis for any activities pertaining to the lease.
This is why legal help and counsel is important in mineral rights leasing. Whatever is written in the contract should be clear and concise, and it should also be satisfactory to all parties. To prevent any misunderstandings and unfair proceedings, legal counsel for each party is critical. The negotiations might be heavy and tiring, but mineral rights leasing isn’t exactly a light decision to make when you also have to consider what the other parties want to get out of the deal.
It is also important for all the people involved in the deal to have sufficient knowledge on the transactions. You should know the terms used and the clauses of the contract and be clear on the specific details entailed in the negotiations. It is crucial to educate yourself about mineral rights leasing before going into a deal on it.
Other potential problems can arise when the mineral extraction is already underway. The main problem during this time will most probably be the damages to the land and property. These damages may not appear right away, and may take years after the operation until they surface. This is a headache to the surface and property owners. If the surface owner complains about this, you can always go back to the contract and settle the dispute. The problem will be worse if the damages appears years later though, because by this time the mining company might already be gone. There would be no one to be held responsible for the damages and the surface owner will be burdened by this.
Aquifers and the water supply should also be thought over. Usually when there is mining and mineral extraction, there would be temporary or permanent loss of water supply. The aquifers might be damaged in the extraction process and the water would drain into deeper rock units.
What is most important in the mineral rights leasing is the contract. So long as you and the other parties have clearly settled your conditions on the document, the potential troubles will be minimized. Just remember that the contract will be the basis of any misunderstandings. So from the very start, in the formulation of the contract, you should have already sought legal help and made your terms clear with the other parties concerned.