PUBLICATION CENTER

A: Each method has its pros and cons, and depends on your company’s cash flow, tax situation, and the technology purchased. Following is a rundown of the important things to keep in mind when you make that decision.

Maintaining a competitive edge in the wide-format printing industry increasingly requires fairly substantial capital equipment purchases. Therefore, it’s a good idea to explore all the purchasing options available.

Rental Mental

One method that’s underutilized in the wide-format industry is renting. Though the rental agreement period can be anywhere from 24 months to 60 months, a 36-month plan makes the most sense. As noted in the chart below, if you would prefer to the keep the equipment longer, or are interested in purchasing it outright at the end of a lease, a lease/purchase plan is probably the way to go.

The primary benefits of renting equipment with a 36-month plan are increased cash flow through lower monthly payments, the ability to write off the payment as an expense on your taxes, and the freedom to easily upgrade to a new technology three years or so down the road without the burden of a potentially outdated piece of equipment that may become more of a liability than an asset.

The extra $300-$500 saved per month with renting versus leasing or buying frees up cash for other areas of your business. Here’s how the monthly payment numbers break down on the purchase of a $95,500 UV-curable printer utilizing a typical Fair Market Value Lease, a $1 Buyout Lease, a straight $1 Buyout Lease, and a Rental.

                                                                                     36-month                  48-month                 60-month

Fair Market Value Lease                                            $2,852                      $2,238                      $1,871

$1 Buyout Lease                                                          $3,096                      $2,413                      $2,005

Rental                                                                            $2,686                      $2,265                      $1,966

*Rate examples courtesy of MBO Finance

Though you’ll normally receive a pre-determined credit toward purchasing the equipment at the end of the rental agreement based on the total rental payments to date, you’re probably better off utilizing a lease or purchase plan if you would prefer to keep the printer at the end of the term.

Because a rental is calculated as an expense, rather than a capital asset, it should help ease your tax burden. It’s recommended that you consult a financial/tax advisor to find out the tax benefits specific to your business.

Moreover, the reality of changing technology makes renting an attractive option since it allows you to simply walk away from the equipment and move into the latest technology. This has the added benefit of alleviating maintenance issues that tend to become more frequent as the equipment ages.

So, rather than having to deal with something that is not only depreciating, but is behind the technological times in terms of pricing and performance, you simply rent a new and better printer and let the finance company unload the old printer for you at the end of the rental period.

Plus, the new printer will come with whatever warranty and service agreement you negotiate, and should take you through the next few years trouble-free until it’s time to upgrade again.

For more information about lease, rent, and purchase options available through LexJet, and which equipment qualifies, contact an account specialist, or LexJet’s digital equipment representative, Andy Yochum, at 800-453-9538.