Manufacturers have long used leasing as a finance option for new equipment.
According to some studies, 70% of all hi-tech equipment is leased. Leasing equipment allows companies to preservation cash and expense the expenditure as it occurs while acquiring technology and equipment they couldn't afford to buy.
What many companies don't know is that manufacturing and engineering software can also be leased.
CAD/CAM, PLM, FEA, and related applications which are sold with a one-time license fee and on-going annual maintenance will usually qualify for leasing. The benefits of leasing are the same for software as for equipment. Companies preserve capital and spread the payments out over a period of years. (Note - there will be some qualifications with software, just as there are with equipment. It is unlikely that you could lease Microsoft Office suites, for example.)
Leasing companies today have cash and are actively looking for deals. Rates are relatively low and terms are very flexible. Many leases come with a $1 purchase at the end of the term. Most software leases will bundle maintenance in with the purchase, keeping the software current during the term of the agreement.
Lease terms and even payment frequency can be negotiated. A pre-payment option can be inserted.
A manufacturer looking at software to reduce cost, improve customer service or speed product delivery no longer needs to have cash in hand. Leasing can allow a company to harvest the benefits of modern software without the cash outlay up front.
The author of this piece, Kurt Freimuth, is president of reThink Engineering, Inc.
The Hamilton, Ohio-based company is a value-added reseller of GibbsCAM and TopSolid software. Freimuth has been involved in machine simulation for several years and serves on the Machine Tool Model Standards taskforce at NIST. For more information about the company visit http://www.rethinkeng.com/
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