Financing information technology becomes a lot easier when the business owner / financing manager or information tech manager understands key issues and financing options. Some areas of financing lend themselves perfectly to technology finance – others… well let’s just say ‘ not so well’! Knowing the differences can make or break your tech budgets, and hopefully not your career! Let’s dig in.

While no industry moves more quickly than tech even it surprises us sometimes and moves even faster. Just when you thought you knew all your options in hardware and software selection, as well as financing along comes things like ‘ Cloud Computing. (Real time computing over a network with scalable virtual servers and software from a remote location)

That whole issue of scalability, i.e. computing power when you need it and financing for that, has always been an issue. Traditionally it’s been handled quite well thank you by using equipment lease financing to address the constant change in hardware and software needs and the actual evolution of those products and services in new versions, etc.

Typically owners would choose a ‘ capital ‘ or ‘operating’ lease to match their ownership needs. The danger with a capital lease not arranged well is that it locked the business owner/CIO in to a long term arrangement that often very quickly needed upgrading. So penalties to break the lease were often expensive in the context of total cost of ownership as companies found themselves locked in to hardware and software that needed upgrading.

Enter the ‘Operating lease’ which allowed thousands of firms, large and small to enter into computer leases that seemed to make a lot more sense. Why? Simply because they gave the company the option to buy, return, upgrade, or extend the current computer financing arrangement. That added a load of flexibility to the owner/CIO’s tech challenges.

Top experts in the industry tell us that today the ‘ Accelerated pace of implementation ‘ is in fact… you guessed it… accelerating!

Larger companies have the benefit of putting large budgets and people assets in place to do major implementations. The business owner in the SME sector is more challenged as they struggle to pick the right hardware and software and not eat into their cash flow and R&D budgets,

Clients in the past who used technology in their R&D and required computing power to perform that R&D could also claim those expenses as part of their SR&ED claim, which was also financeable when filed by the way, Yet that part of the SRED program is in fact being phased out, again making technology financing more of a challenge for Canadian firms who wish to innovate.

Naturally the goal of any computer financing strategy is to lower costs, ease cash outflow, and attain the benefits of the solutions. So having finance flexibility is key, and computer lease financing for hardware and software requirements still makes total sense. (When you have the right lease and lease company in place!)…

Can we provide a good example of why computer leasing works and is used? You knew we could! Although probably not widely known all of Canada’s banks lease computers and software. What??!! Yes, it’s true, so we have banks who only lend and guard our money actually borrowing money to finance their tech infrastructure.

Why would a bank borrow money and incur interest and finance costs and lease obligations when in fact they appear to have all the money in the world?! The answer is what we have shared all along here, namely that its not about the capital cost in an ever changing technology world, its about the flexibility to make changes in your tech assets such as hardware and software with maximum flexibility – allowing the banks ( or your firm ) to replace, upgrade, return, renew .. All the while allowing you to… yes… stop chasing change!

If you want to understand your technology financing options seek out and speak to a trusted, credible and experienced Canadian business financing advisor with a track record of success in computer financing.