– Mike Henderson, spokesperson for CoreTech Leasing, says:
With the exponential adoption of cloud services, IT procurement and other data center decision makers need to promote agility and flexibility to perform in this fast-paced and highly competitive market. Harvard Business Review author, Rita Gunther McGrath, suggests that in the new economic climate, decision makers should focus on positioning companies to remain flexible and agile, shortening those decision cycles in order to position themselves competitively. Technology and equipment leasing is a strategically advantageous financial option leveraged at enterprises to provide key elements of this flexibility and quick decision making necessary to thrive in the data center market.
Leasing is strategic financially because it provides a monthly expense versus a total cost purchase. This means leasing beneficially conserves cash reserves, keeps bank lines of credit open for short-term use, and cuts the out of pocket costs for the enterprise’s technology upgrades while still enabling new projects on the budget. These combined financial strategies allow for flexibility and quick decision making, necessities in the current fast-paced market. Additional strategic advantages are that procurement departments can proceed with projects outside the company’s current budget or move future projects forward in anticipation of additional budget approval in an upcoming period—all the while reducing the risk of ownership.
As regards to the strategic financial benefits of leasing, we spoke with Doug Doerfler, Chief Financial Officer at Stinson, Morrison and Hecker LLP a highly regarded, national law firm with more than 300 attorneys and 375 support staff located in 9 office locations throughout the US. “It’s about cash flow. With leasing, there are no large outflows of cash during the year; leasing allows us to keep the payment stream/cash outflow steady.” When Stinson looked into leasing options, Doerfler continues: “Bank financing was more expensive and limited our firm’s ability to draw on our line of credit. Vendor financing was extremely cumbersome and the terms were less than ideal.” Stinson selected an independent lessor on the market, [now] CoreTech Leasing.
From an equipment point of view, leasing offers an avenue to provide companies with top-of-the line and current technology at a fraction of the purchase price, can provide for 100% financing plus services (not just hardware) and frees staff from the burden of disposing of outdated equipment all the while ensuring access to the most current IT tools and eliminating higher maintenance costs for older equipment. Doug affirms that advantage: “The ability to selectively choose which items to return, keep or extend the lease are flexible benefits for Stinson. We also do not dissipate valuable staff hours to find buyers for equipment that is no longer needed.”
With the fast-paced growth and rapid changes in IT equipment procurement, leveraging leasing can provide the flexibility and agility to stay ahead of pace. If your enterprise decides to leverage leasing in order to optimize these advantages and flexibility, you will want to find the best of breed amongst competing lessors in the space as well as the best fit for your enterprises’s unique needs. You will be in a long term relationship with your lessor; take the time to find that lessor who can be an expert resource for your team throughout the lifecycle of the lease.
Make sure your lessor is best of breed, that they will hand transparent tools to you to understand your Master Lease Agreement, will show upfront the Total Cost of Ownership of the MLA, and will do so with the actual language and terminology of the MLA. The true benefits of a lease structure are not determined by the glitter of the lowest lease rate factor, but viewed as a composite whole.
Mike Henderson is Regional Manager of the Southeast and West for CoreTech Leasing, Inc., and Derek Doerfler the company’s regional Manager of the Midwest regions. CoreTech is an independent leasing company working in strategic partnership with enterprise decision makersas well as over 100 of the nation’s most distinguished law firms to optimize their technology leases ranging from $50,000-$10,000,000. For more information, please visit www.coretechleasing.com.