How Does IT Equipment Leasing Dominate the Market?
It’s not a mystery as to why IT Equipment leasing is on the rise. As businesses increasingly rely on technology and computers to get their work done, this reflects in national trends of equipment leasing. According to the Survey of Equipment Finance Activity by the Equipment Leasing and Finance Association (ELFA), in 2018 almost a quarter of all equipment financing was for IT-related supplies. According to the same study, equipment financing as a whole is up nearly 4.4% from 2017, and this marks the ninth consecutive year of growth for the industry.
Chances are, almost every individual or business has invested in some sort of large technology purchase over the past few years. Maybe it’s to increase efficiency and cut costs in the long run, maybe it’s to make jobs easier and less stressful, or maybe it’s just because it offers a cool, new service. Regardless of why people are buying high-tech goods, they – software and hardware – make up an increasingly dominant chunk of the national (and global) economy. If you sell IT equipment, you probably know this, but do you know about IT equipment leasing?
What’s Considered IT Equipment Leasing?
European Union product standards for certain emissions controls (and the only concrete definition of what constitutes formal IT equipment) consider the IT equipment product family standards as “any equipment which has a primary function of either or a combination of, entry, storage, display, retrieval, transmission, processing, switching or control, of data and of telecommunication messages and which may be equipped with one or more terminal ports typically operated for information transfer.”
So, IT Equipment includes things used to communicate information and data, usually dealing with computers or computer systems. This can include telephones and telecommunication devices, software, hardware, servers, etc. They can be computers used in offices or the software used to check cars for problems. It’s a diverse field of equipment with complex functions – so diverse that the Equipment Leasing and Finance Foundation, in order to show methods of financing, analyzed several aspects of IT equipment separately.
What Should You Know about IT Equipment Leasing?
According to their U.S. Equipment Finance Market Study for 2016-2017, the Equipment Leasing and Finance Foundation reported that for software, computer equipment and communication equipment (these are the three aspects of IT they analyzed separately), paying by loans or lease made up about 36% of financing methods. However, since IT makes up nearly 25% of all equipment financed, that 36% represents a good chunk of money. As a vendor, if you offer financing on your IT equipment, you’re tackling an in-demand market you otherwise wouldn’t have access to.
What else is happening in the market? According to the ELFA report mentioned earlier, in 2018 there was a 30% overall increase in IT expenses. It concluded that companies of every size – in every sector and market segment – are trying to boost their efficiency with IT equipment leasing. Breaking that down more, companies that had revenues of $50 million to $250 million spent the most on IT, and those with vendor origination business models spend more than those with other business models.
This explains the growth in IT equipment leasing, because IT expenditures are increasing overall. It also explains why so much of the market is shifting to IT equipment financing, and why it now makes up such a large chunk. Offering financing for your IT equipment could open up your business to new customers not only because of a growing marketing demand, but also because financing offers a more convenient way to pay for equipment. So what are you waiting for?
If you want to offer IT equipment leasing or other equipment financing to your customers, check out FaaStrak’s financing software. FaaStrak matches your customers up with the best financing options based on their financial situations. Request a free demo today.
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