Capex vs Lease vs Rental

Choosing a printer - should I buy, lease or rent? And what to look out for in your contract

Choosing a printer for your charity, social enterprise or business is like buying a car when it comes to the finance.
There are a few ways in which you can pay; from buying outright, to leasing or long-term renting.

The mode of finance can really affect the overall price, as can the terms and conditions of the contract.  In fact, the small print of the contract can have a big impact what you end up paying.

Unsurprisingly, the printing industry has designed both the finance and contracts to suit them rather than you. Sadly, one of life’s cruel ironies is that the less money you have, the less likely you are to get a good deal.
However, the good news is that now there are one or two disruptors, usually social enterprises, that are on a mission to help other social enterprises and charities get a better deal.

Industry research found that within many organisations particularly in the Third Sector, where time and money are often in short supply, there was a failure to understand the risks within the terms and conditions and within the finance agreements.

As a social enterprise ourselves we want to help our Sector and we’ve produced this guide on how to avoid the pitfalls.

Four finance options for your printer:

There are generally four funding options. The first is purchase, known in the industry as Capex, which is capital purchase for an agreed price and payment within an agreed period. 

Then there are two types of Leasing, both with financing by an external provider.  The first is Fixed Term for a set period, invoiced for a fixed amount, generally in quarters. The second is Agreed Term which is for an agreed term but it auto-renews if you do not cancel 90 days prior to the last payment.

Lastly, Short Term Rentals are for a fixed period, can be the most punitive financially and are often offered to those with limited access to funding. Generally, the equipment is second-hand, a euphemism for someone else’s old machine and the ‘finance’ is provided in-house.

Printer Contract Length

One of the most important things to look out for is the length of contract.

Often the length of contract is a ridiculous five years, longer than the duration of most grant funding!

I once worked in a Community Interest Company where the funding stopped, the office closed yet the supplier was telling us we still had to keep the equipment and pay for the last year of the contract.

At SP&C we are one of the first organisations in the Sector to offer an in-house 36-month contract for new machines.

Additional charges for your printer

In terms of charges hidden within the contract, look out for (ex) VAT charges, annual increases, annual agreement charges, charges for consumable delivery, minimum volumes and expensive exit clauses which are often a feature of the second-hand, in-house finance agreements.

To combat this, we have innovated a 90-day release option without penalty within the 36-month contract so that charities can hand the equipment back and not face large settlements to pay for lease or servicing should their funding be withdrawn. 

Another way in which we’re making equipment more affordable for cash-strapped organisations is to eliminate minimum volumes and just charge for actual usage.

The mode of finance can really affect the overall price, as can the terms and conditions of the contract.  In fact, the small print of the contract can have a big impact what you end up paying.

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