By Jean-Michel Boyer, CEO, BNP Paribas Leasing Solutions UK
Subscription-based payment models, including Software-as-a-Service (SaaS) solutions offered by vendors such as Adobe and Salesforce.com, are increasingly favoured by businesses because they enable cost-efficient and flexible access to critical assets. Leasing offers customers a similar experience, enabling them to scale their operations without compromising budgets.
That’s why IT leasing is a growing market in the UK. According to the Finance & Leasing Association (FLA), in June 2017, new business for IT equipment finance increased 17% compared to the previous year. Businesses are realising that leasing hardware and software, rather than buying it outright, offers them affordable and sustainable benefits.
These benefits extend not only to business end-users, but also IT suppliers and resellers, the environment, and the wider economy.
Benefits of leasing for businesses
As businesses expand, they typically outgrow their existing technologies and therefore need to reconsider their IT infrastructures. However, many growing businesses are challenged by limited access to disposable funds.
Flexible procurement solutions, like leasing, can give them the freedom to access the technology they need without breaking the bank – while also preventing them from being stuck with obsolete or inadequate equipment. Instead, vital cash reserves can be put towards strategic business investment. Within a leasing agreement, regular, fixed payments over a defined contract period also protect these businesses from inflation and other unexpected costs.
Many IT leasing solutions also have the added benefit of factoring in soft costs such as implementation, training and ongoing maintenance for further convenience and budget certainty.
Benefits for resellers
Not all resellers are able to offer their customers a subscription-style contract given the obvious need to optimise cashflow. By partnering with a finance provider, resellers can bridge this issue, by enabling them to lease solutions to their customers but still receive full invoice payment upfront. This means the reseller can recognise revenue immediately whilst the customer benefits from a subscription-style agreement.
IT leasing helps resellers win and retain more customers. Flexible payment terms are in demand: the FLA figures show that more and more businesses within the UK are using finance to procure their IT solutions.
To meet this demand and maintain their competitive position, resellers should integrate leasing solutions into their sales process and encourage their customers to review all their buying options. A leasing contract also encourages the reseller to forge a closer relationship with the customer over time by providing not only physical assets, but also value-add services such as set-up and implementation, consultancy, maintenance and training for staff. This, in turn, creates a more likely environment for repeat business and helps resellers stand out from their competitors.
Encouraging sustainability
In addition to supporting the economy and business growth, leasing also has a long-term, positive impact on the environment. Since, in an IT leasing arrangement, the finance provider retains ownership of the assets, it has final control over environmentally responsible disposal of the equipment.
This not only removes the burden of ownership and disposal from the business end-user, it also encourages faster adoption of the ‘circular economy’, an alternative economic model which is guided by three actions: repair, reuse and remanufacture. Simply put, in a world that is vulnerable to growing resource scarcity, the ‘circular economy’ aims to eliminate waste.
Ultimately, with the right finance provider on board, IT leasing represents a win-win solution for everyone.
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