Why do so many businesses stagger on with out-of-date ERP systems that no longer meet their needs? Because, quite simply, the cost of upgrading can sometimes be too expensive. Unable to justify staying on their ERP provider’s normal update cycle, they skip a release - only to then find that the higher price of the next release is even less affordable.
The good news: it doesn’t have to be that way. Instead of paying upfront, companies can lease the software instead.
Lease an ERP system? Lease software? Of course: because like any other business asset—a piece of equipment, a vehicle, or a factory—leasing finance is readily available.
What’s more, compared to paying upfront, leasing can be a smart move. So let’s look at why.
As any finance director knows, leasing can be a very financially advantageous means of acquiring an asset. So too with an ERP system.
For a start, the repayments are 100% tax deductible.
Better still, those repayments are spread over a period of years, making the monthly cost very affordable. And that spreading effect also applies to the VAT tax incurred by the ERP purchase, too.
Moreover, you can choose to include not just the purchase costs of the software in your leasing arrangement, but also any implementation or training costs—usefully spreading those over the leasing period, too.
Costs and benefits alignment
Spreading the payments this way does more than just make an ERP system more affordable.
It also aligns the costs of an ERP system with the timing of the long term benefits that it delivers.
What’s more, by not making an upfront lump sum capital investment in an ERP system, the cash that would have been invested can be spent on something else, instead—paying down debt, perhaps, or buying new machine tools.
So in a sense, leasing an ERP system delivers a double dose of benefits—those accruing from the ERP system itself, and those arising from the alternative application of the funds that would have been spent on the upfront acquisition of the ERP system.
Access to the best—now
Finally, don’t overlook the benefits of being able to access the very latest ERP technology, with all the improvements that have taken place in ERP systems since the last time your company invested in one.
Because it’s gaining access to those benefits, after all, that is usually the driver behind the urge to upgrade in the first place.
And rather than wait, leasing an ERP system means that the short term benefits can be available more or less immediately.
Better e-commerce capabilities. Improved workflow. Added functionality. New modules, to help the business expand. A richer set of manufacturing modes. Better reporting. Support for mobile technology.
And so on, and so on.
In short, if access to the latest ERP software is on your business’s agenda, consider using leasing finance to acquire it.
It could be a very smart move indeed.