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 Office software leasing in the UK works in a similar way to hardware leasing and offers the same financial benefits. The costs involved can be spread over a suitable period - usually the licence period. Cash flow can be a problem for any business which is why office software leasing can be an advantage as it frees up much needed cash. Instead of purchasing office software a business can lease it - and spends less. A business is able to enter into an office software leasing agreement immediately without having to pay entire costs upfront. With office software leasing in the UK payments are regular and allow the option to upgrade as software becomes obsolete. Because you are essentially renting and not buying the office software you can claim 100% tax allowance on the payment. A larger project with several office software components can sometimes be financed through multiple leases.
The Main Advantages of Office Software leasing in the UK are:
Cash Flow Improvement & Flexible Payment Options – Office software leasing in the UK frees up cash. Leasing agreements rarely require down payments, though you may have to set aside some cash for a refundable security deposit. In comparison to office software leasing, a loan to finance the purchase of equipment typically requires down payments of up to 25 percent or more. Flexible payment options can be offered that allow customers simply to pay for the office software licenses and derive real benefits. Payment profiles can be tailored to match project roll out schedules i.e. an initial payment holiday followed by escalating payments over a pre-agreed period of time.
Tax Deductible - Customer's future tax liability is reduced; 100% of leases are tax allowable compared with normal Writing Down Allowances permitted on purchase.
Multiple software vendor flexibility – Office software leasing contracts can provide a comprehensive leasing solution independent of software vendor or third party provider.
Software Obsolescence – Office software leasing can mean that keeping pace with technology is easier. If your business is an early adopter and relies upon cutting-edge software then office software leasing can be a very attractive proposition.
Easier to finance than purchases – Securing finance for a capital expenditure purchase, especially for a young business, can be difficult as most finance companies will usually want to see two to three years of financial records. On the other hand Leasing companies, usually require only six months to a year of credit history before approving an agreement for office software leasing.
Choosing Office Software Leasing in the UK:
Once you have looked at the advantages of office software leasing in the UK and taken the decision to lease then you need to find the right deal for your business. Here are some of the things you should be looking at:
Short-term Lease - If you do decide to lease office software, keep the term short. A two year option is a good option.
Technology Rotation - A software upgrade clause is a good option to negotiate. This lets you upgrade your office software so you do not end up making a purchase for potentially obsolete software.
Cancellation Clause – It is worth ensuring that your lease agreement has a cancellation clause. Some agreements allow you to pay a fee to cancel the lease. If you take up this option then it is worth noting the cost of any cancellation penalty.
Purchase Option – You may want to purchase the office software after the term of lease has ended so look for a buy option.
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