Sale and Leaseback your IT equipment: Pros and Cons

sale and leaseback IT equipment

IT equipment is one of the fastest depreciating assets a company will ever own.

It makes little sense to have company cash tied up in computers when operating lease rates are so incredibly low – and come with many other benefits too.

Many companies have capital tied up in IT equipment that could be far better used elsewhere in the company.

A Sale and Leaseback of IT equipment releases cash back into the company. It is an arrangement that is good for both the “buyer” and the “seller” of the assets.

The company gets access to funds, usually at a much lower rate than normal borrowing rates. They also get a secured deal with the benefit of a long-term lease. Typically, three years although this can vary depending on the company’s needs. The period of time can be adjusted to suit your individual needs.

What is an IT Sale and Leaseback?

An IT Sale & Leaseback transfers the ownership of a technology asset from your business to the lease company. This is beneficial as it returns the capital spent on these assets to the business.

What are the advantages of an IT Sale and Leaseback arrangement?

There are many reasons that Sale and Leaseback is so attractive to owners of IT equipment that may have previously purchased their equipment outright:

  • Improved cash flow. Very fast access to capital tied up in the equipment. As little as 2 weeks.
  • Low monthly payments. Extremely good lease rates when compared with conventional loan facilities available to a business.
  • Nearly all businesses qualify.
  • The lease is secured by the equipment and so usually does not affect the company’s credit rating.
  • Usually does not affect other credit facilities currently in place or needed in the future.
  • It’s extremely tax-efficient. The lease payments will qualify as operating expenses and so they can be claimed against tax.
  • No disruption to the business.
  • Ability to adopt a managed Asset Lifecycle approach on assets already owned.
  • The risk in the asset and the disposal obligations will now be undertaken by the lessor. They will, of course, have specialist skills and knowledge in this area.
What are the Cons?

There are very few disadvantages to an IT equipment Sale and Leaseback arrangement.

You should, however, always look at the profile of the company arranging the funding. Ideally, it should be a business that is an expert in the asset types that are subject to the lease-back, rather than a simple money lender. or finance company.

When looking at the Cons, there are three factors to consider:

  • The lease is secured by the equipment, so you really don’t want to default and risk the equipment being repossessed.
  • The equipment is normally valued at its cost or Net Book Value so the amount you will get on the sale is usually less than you paid in the first place. This is particularly true if you paid over the odds for your computers.
  • In exchange for the return of the capital, you give away control of the asset to the buyer.
Asset Financing. What IT equipment is best suited to a Sale and Leaseback arrangement?

To be fair, all equipment is suited to this sort of arrangement although some types of assets may bring more benefits.

It doesn’t have to be just computers that can be used as security. Any IT equipment including infrastructure, networks and servers are all suitable. However, mobile computing including desktops and laptops are especially good assets for these programmes due to their re-use possibilities.

Choosing the best company for IT Sale and Leaseback arrangements.

At Innovent Leasing, we specialise in IT Sale and Leaseback arrangements.

We will ensure you get the lowest quarterly payment plan on terms that suit your company. The assessment and lease are carried out extremely quickly (two weeks is typical) so that you can get funds straight back into your business.

In addition to the best possible rates we also provide a level of technical expertise that is as valuable as the loan itself. We will provide a full asset management service to ensure that you get the very best out of all of your IT equipment.

In the future, we can help you buy the IT at the right price and we reuse the assets after you have leased them for 3 or so years which saves you more money.

  • You get entry into a sustainable financing solution that helps your company engage in the benefits of a circular economy.
  • A better refresh cycle. The avoidance of obsolescence and reduced maintenance costs can result from a disciplined, lease-based refresh cycle. It is easier to plan and budget for your equipment recycling programme.
  • Easy to cope with upgrades, platform changes and software updates with minimal impact on the business.
  • Sale Leaseback works for small business owners, SMEs and Blue Chip clients alike.

One of our team would be delighted to give you details of the Sale and Leaseback Deals and leaseback solutions we have in place. All sale and leaseback transactions are FCA regulated.

So give us a call today and we will talk you through the options: 020 7123 4570.

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InnoVent is the leading UK Asset and Lease Management Specialist for New and Refurbished IT equipment.

We have one aim: reduce our clients' total cost of IT ownership. 

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