Traditional Purchase, Leasing, or HaaS?

Sooner or later, every company has to face the need to purchase new IT equipment. Sometimes it is the first purchase for a startup, other times it is a routine equipment change-out once in several years. And every time it is not only about deciding what, and in what quantity, one needs to buy, but is rather about how to save as much as possible without any hassle.

Basically, there are 3 options to choose from:

  • Traditional purchase.
  • Leasing, in case of which a leasing company (a lessor) purchases equipment and other assets from a supplier and then rents them out to a client on a long-term basis. The client can buy out these assets over time.
  • HaaS (Hardware-as-a-Service). Narrowly defined, it is the renting of equipment (which can also be called subleasing). Broadly speaking, it is a set of services allowing companies to reduce and optimize the IT infrastructure and cybersecurity expenses.

Traditional purchase

A supplier and a client execute a sale and purchase agreement on software or/and hardware supply. These costs are treated as CAPEX and the equipment is entered as a client’s asset.

This is the traditional equipment purchase model. It requires that the client has to withdraw the whole sum to pay for the equipment, enter this equipment as an asset, pay taxes on it, and dispose of it over time.

Leasing

This process involves 3 parties—a client, a supplier, and a bank. The main interaction takes place between the client and the bank, and the bank has the right to approve or decline a lease application after scoring, which is a credit risk assessment process involving the due diligence review of the client.

If the leasing is approved, 2 agreements are executed: a lease agreement between the client and the bank and a three-party agreement for sale and purchase between the bank, the supplier, and the client. This interaction is slightly more complicated than the traditional equipment purchase model, and furthermore, it is hardly possible to include software in the list of purchased assets.

The bank names the asset holder, and the expenditure is treated as CAPEX/OPEX.

HaaS (Hardware-as-a-Service)

HaaS is simpler than leasing as it requires only one sublease or service agreement between the bank and the client. Besides that, the scoring procedure in Softline is simpler than that adopted by banks and the sublease agreement does not affect the client’s solvency, which means that the company retains the ability to take more loans and use the money that it has freed up.

But unlike the traditional model, these costs are treated as OPEX and the client does not become an asset holder.

What to choose?

Everything is more or less clear with the traditional purchase. If this model suits the company well, the agreement is executed between the client and the supplier, the client pays and every party is happy—the client gets the equipment they need and the supplier receives the money for this equipment.

If one has to choose between leasing and HaaS, then it may take some time to compare the options and make an informed decision—but in most cases, Softline clients prefer HaaS.

Why? There are several reasons:

  • The leasing approval procedure is simpler than the one offered by banks. Softline offers more favorable scoring.
  • The client does not have to disclose its financial statements to the leasing company.
  • To purchase out the equipment is a client’s right, not their obligation, which it is in case of the traditional leasing.
  • HaaS payments do not affect the solvency of a company in any way.

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