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.