Before finalizing any acquisition, you should weigh all of your financing options.

Cash Flow Advantages
In a typical purchase, the company must pay for the equipment up front. A lease smoothes out these cash payments over time. This allows you to conserve working capital or use it towards revenue-generating purposes.

Tax Benefits
In a true lease situation, the lease payments are normally tax-deductible for the lessee. If a company purchases the IT asset, the end user may claim the depreciation expense, which is tied to the IRS depreciation schedules. IT managers should consult with their company’s tax advisor to determine the best course of action.

Flexibility
When you purchase, the equipment can not be fully utilized or appreciated. With a lease, you have the convenience to upgrade, modify or swap equipment at any time during the lease.

Balance Sheet
When the lease is structured as an operating lease, the asset is not considered a liability and therefore, does not appear on your balance sheet. Financial Accounting Standards require owned equipment to appear as an asset with a corresponding liability on the financial statements.

Risk
When the asset is purchased, the user bears all risk of the equipment, including the depreciation. With a lease, the user transfers the risk of obsolesce to the lessor.