How to Finance your Phone System
If you’re a business considering upgrading or replacing your current technology, there are a few things you’ll need to consider. For instance, what issues will your new technology solve for your emerging business, and is it possible for the network or infrastructure that you’re currently using to support it?
Additionally, what level of downtime are you going to need to implement this new tech, and will you need to train your users? Alongside so many crucial questions, one of the biggest issues that companies face is the question of how you’re going to finance your phone system purchase.
New technology in the marketplace has designed brand new purchasing solutions beyond services like perpetual software licensing. The latest financing models used to purchase new systems often end up as a decision between OpEX and CapEX – but it can be hard to choose which is ideal for your business.
Before you can determine which financing model is best suited to you, you’ll need to understand how each impacts your company’s bottom line. Before cloud-computing became so popular, if a business wanted to obtain a new phone system, they either had to buy their PBX hardware upfront and file it as a capital expenditure (CapEX) or alternatively, source a lease finance agreement whereby the money could be paid back monthly with interest (OpEX).
CapEX investments refer to any significant cash investment, including infrastructure, property, software licenses, and equipment that show up on the balance sheet for a company alongside it’s depreciation.
Alternatively, OpEX consists of operational costs, which are on-going expenses such as utilities, rent, wages, and services. Because the costs are ongoing, OpEX is part of the profit and loss system for a business. Although CapEX was considered the norm for PBX purchases, it also created a barrier for companies with tight budgets who wanted to take advantage of new technology. However, today’s companies have a choice between hosted phone systems using OpEX, and on-premise solutions using CapEX, as well as services that offer both.
OpEX is the latest solution for telephone system financing, but what are the benefits?
The move into the cloud has created more of a level playing field for businesses of all sizes now that several technology purchases have been shifted from CapEX to OpEX, including business phone systems. There are considerations involved with renting and owning equipment, but the OpEX model has various unique advantages which make it the optimal choice for those with tighter budgets and a desire for growth.