Lease vs Buying a Commercial Dishwasher
There are many factors to consider when deciding upon new dishwashing equipment for your business. One of the first decisions that you’ll need to make is whether you should buy the equipment or lease it. Important is to take a look at both short and long-term costs of both options.
You’ll need to ask yourself this question: does your business require new or used equipment? If used equipment is quite enough, then you’ll be able to save a few bucks when making purchase, but you won’t have the option to lease it. If your business requires new equipment, then you’ll have the option to either buy it or lease it.
When you compare all costs associated with purchasing (shipping, tax, installation) with lease terms and pricing, it may seem that buying would be a more cost-effective way to go in the long run. However, if you plan to keep the equipment for the short term, then you’ll probably find that leasing is a better alternative. On the other hand, if you add maintenance and repairs to the buying option, you’ll begin to realize that leasing has advantages both in terms of cost-reduction and otherwise.
The key to making the right decision is understanding your company’s exact requirements and understanding the purpose of the equipment that you’d be getting. In case purchase is something your business would struggle with, we’ll help you decide by presenting advantages that leasing has over buying the equipment.
#1 Latest Technology
The main advantage of leasing commercial dishwashers is that it gives you repeated access to the latest technology. This is especially important in case technology is critical to your business, as you would be able to get shorter leases to ensure you always have the most recent technology around.
On the other hand, if technology is not that crucial for your business, you’d be able to replace it when necessary, for example every three years, because one of the options that you’d have at the end of the leasing period is to upgrade to new equipment. Even though, new technology is not critical in your case, it is definitely important for getting your customers to trust your business and to stay competitive.
Buying means that you’ll be stuck with the equipment because you would own it, and that is something that is not beneficial if you think about how fast the technology is evolving and getting outdated. You would need to decide each time whether your business allows you to keep using it (in which case, the questions is for how much longer?), repair it, store it or sell it. If your business requires technology updates, you would need to set aside and invest new capital each time you wish to renew your equipment. This is something most small businesses can’t afford.
And if you decide to go with the used technology option, watch out for the broken equipment that you won’t be able to return or sell later.
#2 Monthly Maintenance
Leasing has another advantage over buying the equipment as buying gets you the equipment only, while leasing includes maintenance as well. Buying means that you would be responsible for all maintenance and costs, which can get rather pricy depending on the difficulty of the equipment issue.
Some manufacturers offer limited warranty for their commercial dishwashers, and for a certain monthly investment, you can get a local authorized repair service company to take care of quick monthly checkups.
However, these companies usually have free labor on repairs during working hours, and normal rates during off-work hours, and the monthly fee usually doesn’t include parts. Such a deal doesn’t provide much confidence, as crashes and disasters are common on the busiest nights of the week.
With leasing contract, the leasing company technically owns the machine, so they would take care of all repairs and regular maintenance, keeping your equipment in tip-top shape. Moreover, there would be no additional repair and maintenance costs above the lease. Important, however, would be to point out that leasing companies do differ, so it is important to find a trusted company that provides immediate attention and doesn’t disagree with you on what the leasing contract includes when it comes to repairs and maintenance.
#3 Less Pressure on Cash
Purchasing means higher initial expense, that usually involves financing the purchase though a lender. If you don’t have the cash reserve that is large enough, it may be difficult to pay for all the costly equipment at once. This may also force you to settle with lower-cost and quality equipment that you don’t really want, which is not good in the long run.
Unlike buying, leasing enables a business to use its operating and not capital budget, which helps it overcome cash-flow issues and have more working capital in its pocket. This will enable you to invest money in other important aspects of your business, such as marketing or design. The interest rate oscillations are also avoided, as the leasing contract is set for a fixed monthly fee, which means easy, predictable payments and easier budgeting for the equipment in the long run.
#4 Yearly Tax Savings
It is important to consider all tax-related issues and benefits for both buying and leasing, as they could differ depending on the business situation. The advantage of leasing dishwashing equipment is that it can be offset against tax, meaning that usually 100% lease payment would get deducted immediately. However, we must point out that you should always consult your tax consultant, as different types of leases have different accounting for tax purposes when it comes to how much you can deduct as an expense on your profit or loss statement.
When it comes to buying with financing option, you’ll only be able to deduct the interest portion as an expense, as the principal amount you’re paying on the loan isn’t considered a taxable deduction.
Benefits of Dishwasher Leasing
As mentioned in the previous chapter, different options like buying, renting or leasing commercial dishwashers are all individually suitable for different kinds of businesses. Not every business would benefit from buying the equipment, and not all businesses would benefit from leasing it.
Before making a definite decision, think hard about what your business requirements are, what would each option bring in the short term and long term, and finally, which option would benefit your business the most.
To help you with your decision, we’ll mention top benefits of leasing the dishwashing equipment that would help your business get and stay on top of the competition.
#1 High Quality of Service
In case your kitchen or bar equipment starts to break or becomes outdated, your customers will quickly find out. It doesn’t matter if they have access to the equipment or not, bad word spreads fast, and the last thing you need is people talking about the mess of the appliances that handle the ware you serve them food or drinks in.
As dishwasher can be one of the first things that can damage your reputation when it starts to wear down, maintaining and updating the equipment is an important part of the whole positive experience about your business. Leasing is what would secure latest equipment, regular maintenance and service, and therefore – high quality of the way you do business.
#2 Flexibility and Various Options
Leasing dishwashing equipment can be set to different number of years which gives different business different options to choose from. Many companies also offer different tailored packages designed to meet requirements of businesses of all sizes.
Important is just to pay attention to the available lease terms of different commercial dishwasher companies, as you don’t want to get stuck with the terms that are longer than you need them to be.
#3 Multiple Options at the End of the Lease
What is great about leasing is that you’ll have different options to proceed with after the lease period is over. It all depends on what your business needs next, so one of the greatest benefits is that you’ll have open options to choose from.
As mentioned in the previous chapter, a great benefit in case you run a catering business that relies heavily on latest equipment, is that you would be able to get an upgrade to new equipment after the lease ends. In case you don’t need to change equipment so frequently, you can continue using the equipment that you already lease for a lower monthly fee.
You can also choose to return it without penalty, or more beneficial – you would be able to keep the ownership of the equipment for a certain additional payment which is something rental agreements don’t offer.
#4 Equipment Experts Available 24/7
Monthly maintenance takes one more worry of your mind, which is hiring a repairman or a repair company to take care of your equipment. Moreover, the leasing company would help you choose the appropriate dishwashing units to fit your business requirements and size and will advise you on the appropriate chemicals. You would get new equipment plus regular consulting.
Important to check is the response time and availability of the tech support, as some companies offer limited support, while other offer emergency 24/7 service, which is one of the most important things for having your business operate on minimum downtime.