IT and Business Insights for SMB Solution Providers

6 Reasons to Offer Phone System Leasing

Paying one monthly price for business communications instead of a lump sum enables clients to free up capital for other IT projects, among other benefits. By Wayne Landt

WHEN IT COMES TO replacing a phone system, cost can be a major obstacle for companies that struggle to shell out a large sum all at once. Resellers have explored ways to help customers manage that cost, including offering hosted VoIP services with low monthly payments or implementing IP phone rental programs. While these options do provide some cost relief and have paved the way for business communications to be an operational expense rather than a capital expense, they are not always a good fit.

But there is another option available: leasing. Offering your clients the ability to lease a phone system enables them to pay one monthly price for their business communications without the high, up-front cost associated with buying the full system. In fact, a 2015 study by the Equipment Leasing & Finance Foundation found that 78 percent of businesses availed themselves of at least one form of financing when purchasing equipment, and that leasing equipment was the most-used financing option.

There are many financial and nonfinancial benefits to leasing for both customers and resellers. Here are the top six reasons why resellers and MSPs should offer leasing to their customers:

1. Predictable monthly expenses. With leasing, there are no variations on cost from month to month. This enables businesses to maintain a budget with predictable monthly expenses instead of incurring the high, one-time cost associated with purchasing and implementing the phone system. Another advantage of using a fixed monthly payment structure is that it frees up the customer’s capital for other IT projects. By shifting the money that would have been required for a large, lump-sum payment to a monthly plan, businesses have more available capital to use for other purposes.

2. Term lengths that suit customers. Customers are given the option to determine the length of the lease that best suits their businesses, whether it is short or long term. This helps companies choose the monthly payment that fits reasonably into their budget. Given that the lifespan of an on-premises phone system is typically five to seven years, resellers should help their clients evaluate the pros and cons of term lengths beyond 48 months.

3. One price for an entire phone system. As with home and mobile phones, business phone systems can be bundled to offer a discount. The bundle eliminates the need to spend additional money on necessary parts, while the customer still pays only one amount per month for the entire system.

This means a business could potentially bundle into a single monthly payment IP desk phones and feature modules (if the system requires add-ons for mobility, call center, or other functionality, for example), or even end-user licenses and maintenance and support fees. Customers should always ask about restrictions on individual leasing programs, as not all programs allow soft costs (maintenance, training, shipping, and so on) to be financed as part of the lease.

4. Up-to-date technology. Technology is constantly evolving and improving. A lease gives customers the ability to stay on top of new advances in phone systems. At the end of each lease, businesses have the option of purchasing the system they are using or upgrading to a newer system that is faster and less expensive.

5. Quicker buying cycles. Leasing companies are typically easier to work with than lenders and have the ability to extend credit faster. For this reason, the buying cycle is quicker and there is no need to postpone a deal because of a delay with the creditor.

6. Tax deductions. There can also be significant tax benefits to leasing. Depending on their specific tax situation, customers can structure a lease to take advantage of Section 179 of the U.S. tax code. This means they could deduct up to $500,000 for the purchase of qualified equipment, even if it is leased.

WAYNE LANDT is the director of worldwide channel sales at Huntsville, Ala.-based Digium Inc.

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