When your company needs to acquire IT equipment, the options are either a long-term lease or purchase. If you need fixed monthly payments, regular infrastructure upgrades, and state-of-the-art equipment, leasing will may work best for you.
Leasing is increasingly becoming an option by studios in the media and entertainment industry, but what happens if you no longer need the equipment before the end of the lease? Or if you need it beyond the lease term? An emerging trend is project-based leasing.
What is project-based leasing?
As its name suggests, project-based leasing provides IT hardware for the duration of a specific project, such as movie production or video game design.
Project-based leasing is particularly useful for rapidly changing industries where it is important to be nimble and adaptable such as marketing, engineering, construction, and especially media and entertainment.
It offers flexibility since the lease period can be customized to match the project’s duration.
Advantages for media and entertainment
The media and entertainment industry is facing unique challenges. But when it comes to IT equipment, project-based leasing can provide a solution to every challenge.
1. Technology refresh with every project
Increasingly, CIOs of media companies are facing increasing pressure to ensure their technology platforms meet both current and future needs. The latest 3D editing, rendering and modeling software requires the latest high-performance workstations and storage in order to stay current and maintain a competitive edge.
Once a project is completed, if you have purchased the IT assets, they could end up gathering dust and becoming obsolete and sometimes even before the start of the next project. And what about the next project? You might not yet know when it will start, how long it will last, and what the performance requirements are until you’ve signed the deal.
Thanks to project-based leasing, you benefit from a technology refresh at the start of every project, ensuring your IT infrastructure is current and suited to your project’s needs.
2. Cost savings
The cost of leasing is a fixed, recurring expense and you can allocate the monthly equipment costs directly to your project expenses, ensuring a better managed and predictable budget.
In addition, since project-based leasing is less expensive than buying new equipment each time, you can free up capital for other strategic investments.
3. Lower disposal costs
At the end of the project, you do not have to worry about storing, selling, or disposing of the equipment. Everything is taken care of – you just return the equipment to the lessor.
Similarly, you can save on labor since you don’t need to manage equipment maintenance and inventory. You can focus your attention on securing the next project.
Financial lease or operating lease – choose wisely
With a financial lease, you are responsible for the leased asset and cannot avoid depreciation. At the end of the lease, you have the option to buy the equipment. In the case of an operating lease, you return the leased asset at the end of the lease term, without worrying about depreciation.
It is important to understand the difference. With project-based leasing, you will return the equipment at the end of the project, so the option to purchase is not relevant. However, you should carefully consider what your options are for early return if the project is completed early; or late return, if the project due date is extended. Check the lease terms carefully to understand any financial penalties associated with early cancellation or late return.
Include your accounting team in the decision-making process to ensure you choose the right leasing option in order to extract the greatest financial benefit.
Our experts can offer you flexible options tailored to your needs, as well as guidance on selecting the latest technology for your next project.
Do not hesitate to contact us for more information.
This post is also available in: FR