The Pros and Cons

When we think about the word leasing, we tend to associate it with apartments and cars. However there is so much more to leasing in the context of workforce technology and materials handling equipment. Traditionally warehouses, factories, and industrial enterprises purchase technology equipment to be used for a specific term; usually 4-7 years. Operational leasing allows a flexible alternative to capital intensive purchasing cycles. Like all business decisions, the pros and cons need to be weighed before choosing between these financial paths. Here are three areas of consideration to compare and contrast buying or leasing workforce technology.

Expenses & Expenditures

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Some finance and accounting structures are built for capital expenditures incurring high up-front investment to their books. While this may be the traditional format, purchasing trends across industries are heading toward monthly subscription model payments. Instead of paying upfront $3-5k/worker for handheld scanners, and ancillary workforce technologies, innovative companies are adopting monthly payment models for more advantageous accounting and increased technology innovation.

Pros and Cons:

  • By leasing or monthly subscription, operations see little to no upfront costs, and payments are made each month for the lease/contract term. The residual value of technology at the end of the contract term reduces the monthly cost allowing new technologies to be adopted at a faster rate.

  • You have the flexibility to continue your monthly subscription at the end of the contract term, cancel it, or alter for your needs.

  • Payments are kept on the books as operational expenses rather than capital assets

  • Leases can come with built in warranty and replacement programs, thus your monthly payment wraps service, technology and support into one encompassing monthly fee, rather than owning technology and paying for support/service on top of your initial investment.

Having the right tools to ensure your business runs efficiently and financially sound is vital - leasing can ease the heavy capital investment and servicing costs that bottleneck budgets.

Obsolescence

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Most industrial enterprises are utilizing legacy workforce technology at least 5-7 years old. Because of their high upfront costs, managers need to use products through end-of-life to see a return on investment. This results in newer generations of workforces using outdated tools. Each new generation of worker mobile technology brings more productive, energy efficient, and user friendly features. Leasing and subscriptions assure that you won’t get stuck with cumbersome, legacy tools that workers hate to use. Rufus offers a monthly subscription wearable platform solution to ensure you have the latest hardware and software from Rufus as soon as it is released- no extra costs.

Pros and Cons:

  • All technology has a life-span will eventually become less efficient and productive over time

  • On a monthly model you have the latest technology available- no lag between operating systems and industry leading advances, sensors, and practices.

  • Trading in technology for new platform requires some training time, but will have a net positive effect on productivity

Long-term Effects

The ability to depreciate assets over time and fit capital purchases into traditional budgets is widely practiced today. However, unless you are cash rich or don’t have greater capital needs, many growing businesses find monthly subscriptions or leasing models favorable for long-term strategies. Key questions to ask yourself are: Do you currently have the capital to spend or would smaller payments over time with updated technology work in your favor? Are there ways to deploy capital more efficiently? Are there investments that would garner a higher return than sitting in the bank account?

Pros and Cons:

  • Expense the monthly costs and add/reduce equipment as needed

  • Buying outright will allow you to depreciate assets and reduce your taxable income.

If you’re interested in learning more about the Rufus Wearable Platform and how our monthly subscription solutions accelerate your technology and business innovation, contact us today!