Have CAPEX Funds to Spare? Don’t Use Them on Your AV Equipment.
Learn 3 reasons why it’s never a good idea to use CAPEX funds for a commercial AV system installation
Technology is one of your most valuable business assets. AV systems and other technology solutions are key drivers of growth, organization, customer service, transactions and efficiencies in your business model. Choosing the right commercial AV system installation is a significant investment into your organization’s goals for growth and revenue in the coming years.
Traditionally, businesses have purchased AV equipment using capital expense (CAPEX) funds, which are reported on the balance sheet as significant capital investments. But moving forward, CAPEX isn’t the only financing model available for making technology investments. And truthfully, it’s not the most financially sound way either.
Keep reading to learn why we encourage New York City, NY, businesses to save their CAPEX funds and look to other financing solutions for AV and technology investments.
3 Reasons Not to Put Cold, Hard Cash Down for AV Assets
Peeling back the layers of costs that go into securing new AV and technology solutions reveals why CAPEX funding is not a financially stable way to purchase technology.
- Buying expensive equipment sinks valuable cash flow. Commercial AV systems typically cost several thousand dollars per room. Sinking capital expense funds into expensive equipment obstructs cash flow to other areas of your business until you can recoup the costs. The initial expenditure necessary to purchase equipment could set your overall growth goals back by several months.
- You’re responsible for the hidden costs of ownership. What many businesses fail to consider is that buying new AV equipment is not a one-time expense. Along with the hardware, you are responsible for the costs of system installation and labor, software licensing, employee training, IT support and management, maintenance, repairs, and updates. The bulk of these hidden costs of ownership are unrecoverable expenses for equipment that depreciate significantly over time.
- AV equipment is a depreciating asset. At the rate technology is advancing, your brand-new, multi-thousand-dollar AV system is practically obsolete by the time you finish installing it. The biggest problem with sinking a large cash investment into new AV equipment is that you’re locked into a solution for several years to get the most value out of the purchase. Without the flexibility to upgrade your technology, you may not be able to keep up with competitors or customer needs in a shifting, technology-first environment.
What Is a Financially Smarter Alternative?
If businesses aren’t purchasing AV equipment, what are they doing instead? The market is shifting toward leasing technology as a service package. When you finance your technology as a service, your business pays a monthly fee for the AV equipment in your organization. Many leasing companies also offer bundled services with support and maintenance.
Leasing equipment is a more flexible and adaptable solution over an outright purchase. Your business can lease the most advanced technology solutions for an affordable monthly payment rather than cripple your cash flow by sinking a large expenditure into equipment. When the lease is up, you can upgrade to new — and even more advanced — technology solutions that match your business needs. The burden of obsolete technology falls on the leasing company, not you.
Alliance Telecommunications can help your New York City, NY, business invest in commercial AV systems and other technology installations the smart way. Contact us today to schedule a consultation with our experts.