For many small companies, paying upfront for a new telephone system is not feasible. When businesses cannot afford an out-of-the-box system, they lease the equipment they need. Below, you will learn about the various Telecom equipment leasing options available.
FMV (fair market value): This is also known as a rental program; at the end of the lease, you don’t own the equipment. If you want to buy it, you pay the equipment’s fair market value. The only catch: your idea of “fair market value” and the leasing company’s will probably be different.
An FMV lease is the lowest-priced monthly option, and is ideal if you’re planning to upgrade to Envision Networked Solutions at the lease term’s end. This option can be written off as a monthly operational expense, and FMV is perfect for companies that want the latest telecom technology at the lowest possible price.
The $1 buyout: This is a common option for businesses, with prevalence depending on how long they plan to keep the equipment. At the end of the lease term, for just $1, you can own the equipment. If you choose this option, your company will have to depreciate the equipment for tax purposes. This choice is great for companies that plan to keep the same telecom system for the duration of the lease (or longer), and those that do not have the capital to buy a system outright.
A shield lease: Shield leasing is the least common option, but it’s becoming more popular with tech companies. Not many vendors offer it, but if you can find one, it may be the perfect solution.
Is your company spending too much on technology that’s going to be obsolete in a couple of years? Are you waiting for the next big development before you buy equipment? Shield leasing allows you to upgrade at any time, as long as the new lease is $1 or more per month than the original lease. These programs can be written off as operational expenses, and typically fall between the FMV and $1 buyout in price. Check with your telecom partner to determine which option suits your company.