You Are Looking for Business Software Financing Options for your Systems and Asset Acquisitions!
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Financing & Cash flow are the biggest issues facing business today
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TECHNOLOGY EQUIPMENT & SOFTWARE FINANCING
No secret that in today's competitive environment, any advantage business has over the competition is valuable - that’s an understatement, as all businesses need software of some type. Business software financing options are a welcome asset to your corporate financing toolkit! Suddenly, project costs and project financing budgets don't seem that bad when it comes to ' IT FINANCE ' and enterprise software financing in Canada.
STAYING COMPETITIVE WITH TECHNOLOGY ACQUISITIONS IN SOFTWARE AND OTHER TECH ASSETS
How do I pay for this? The price of tech might be going down but is still a huge part of every company's budget. That's the technology acquisition question we get a lot at 7 Park Avenue Financial.
As your business technology budget expands, the ability to fund those acquisitions becomes more important than ever. It's no longer a secret that the requirement to be up to speed in your industry to run and grow your business often revolves around technology and software vendor solutions.
Computer software and hardware vendors need to be paid in 30 days, so if your company office budget doesn't have access to unlimited operating capital, an equipment loan /software lease makes tremendous sense. In many cases, businesses recognize that they want to match the benefits of the technology over time to cash outflows. If a software license, as an example, has a one-year term, every financial manager recognizes the benefits of matching payments rather than utilizing the capital budget process for full acquisition.
Software package and hardware vendor incentives can often make the acquisition cost very attractive when financing is an option. Vendors wich to be paid 100% upfront and the software and hardware lease options allow those vendors to be paid in full on delivery/installation.
The reality that comes as a surprise to many clients is simply the fact that technology can be leased in today’s terms that covers associated hardware systems (servers, PCs, laptops) as well as software (our subject today) and the new leasing asset on the block: solar, wind and cleantech assets and security software systems financing.
WHAT DIFFERENTIATES SOFTWARE FINANCING FROM OTHER TYPES OF FINANCE
Some key issues differentiate software financing in Canada. Issues that you have to consider and consider are the types of leases offered in business software financing options, the documents that come with that lease, and, probably of prime importance to our clients, how these leases are priced. The tax advantages that typically come with equipment lease financing are also available.
SOFTWARE LICENSE FINANCING
The software itself is a broad term - we refer to the software you are developing (yes, it can be financed) and the established applications you purchase. Many transactions in Canada are software-only leases and loans. A present surprise to our clients is often the fact that the actual software licenses can also be financed (remember, you use the software, you don't own it).
BUNDLING YOUR TECHNOLOGY FINANCING NEEDS!
Much great technology financing occurs when you utilize the concept of 'bundling' - that is to say, you acquire hardware and then bundle in numerous soft costs, including software, to achieve a blending pricing and maximum financing of your transaction.
BENEFITS OF SOFTWARE FINANCING OPTIONS
In technology finance, aka ' IT FINANCING,' when it comes to hardware, you should POTENTIALLY consider an operating lease for the hardware component of your transaction. The software and other soft costs (training, licenses, maintenance, installation, etc.) are financed at the industry terms like 'full payout. ‘ By combining the rates on both parts of the transactions, you achieve a blended rate, making your overall business software financing attractive from the lease and loan perspective.
Companies have the ability to access software financing options around Saas (software as a service financing ), cybersecurity, CRM ( customer relationship management and subscription software and secured file sharing.
Working with 7 Park Avenue Financial allows you to access quick approval and funding via our industry expertise - We make the documentation simple to understand, and with credit approval, 100% of your software acquisitions can be financed - conserving your cash flow for day to day operations with software financing rates matched to your firm's credit quality.
FLEXIBLE FINANCING!
The flexibility of choosing both the products you need as well as the appropriate vendor is what makes tech financing easier than ever - Business owners today are looking for flexibility around terms and payments that match their capital budgets - they also want to be able to finance the multitude of options that surround hardware of software acquisition.
Bank financing might, of course, be available. Still, that process can be time-consuming given your timing requirements in today's fast-moving world where competitive advantage can be lost quickly!
THE CRITICAL ROLE OF SOFTWARE IN YOUR BUSINESS
In previous times software solutions were not considered financeable assets given they were viewed as an ' intangible.' The critical role that software and related hardware play in today's economy changed quite quickly!
The ability to expense lease payments over a multi-year term that matches benefits with cost allows a business to maintain its working capital and cash flow goals around acquiring assets.
WHO FINANCES TECHNOLOGY ( SPOILER ALERT - EVERYONE!)
Business owners might be surprised to know that even Canadian banks financing software and hardware needs - that might be for accounting treatment off-balance-sheet reasons or budgetary issues around huge tech investments and the time value of money.
No firm, large or small, wants to lose the technological edge sought by every company surrounded by competitors.
Every business owner and financial manager is concerned about their cash flow and working capital funding position around financing technology investments. Today's world of cloud-based platform computing, data usage, and the use of artificial intelligence ( AI) allows a company to focus on long-term success. Controlling cost in those environments has become job 1 for many financial managers and chief information officers. The search for the best possible ways to finance these tech investments is always top of mind.
WHAT ADDITIONAL COSTS CAN BE INCLUDED IN YOUR FINANCING SOLUTION?
Many ancillary costs can easily be bundled into your software financing agreement lease - that includes funding for :
Training
Implementation costs
Upgrades
Renewals of subscriptions ( the ability to turn annual subscriptions into one easy monthly manageable payment )
Additional computer hardware required around infrastructure ( servers / network equipment / computers / laptops / tablets ) around your e-commerce of social media strategies
CAPITAL LEASES VERSUS OPERATING LEASES - YOU HAVE A CHOICE!
Let’s use a quick example to illustrate financing software licenses and computer hardware via a software technology financing solution.
You buy a 100K server and related 'hardware' and agree to finance it for a 3-year term. Additionally, you require and acquire 50k of software. What would the monthly payment be on this transaction?
We maintain it could well be in the 4.1k range per month on a 36-month term. That interest rate works out to about 1% or less because the operating lease subsidizes the software financing. Understanding vendor financing and IT finance flexibility create your win/win solution in tech acquisitions. Talk about saving money! Payments terms can also be adjusted to your working capital requirements, including quarterly payments as an example.
CONCLUSION - REMOVING OBSTACLES TO INNOVATION!
Does your business need to acquire upgrades or the latest new software and technology assets? The ability to finance software is key to long-term business goals. Understanding the benefits of leasing and financing software and technology from software vendors and related hardware mfr's is a key aspect of removing those ' obstacles of innovation ' to your business in today's competitive environment.
Business owners and financial managers constantly seek the best financing options for their cloud solutions, Saas services, and cloud computing investments.
Want this and other advice on proper tech financing and business software financing options on your systems and technology assets. Speak to 7 Park Avenue Financial, a trusted, credible, experienced and trusted Canadian business financing advisor with software and technology funding experience.
Options you thought you never had will become available immediately when considering technology financing for entrepreneurs. Take advantage of the power of hardware and software financing to power sales of your products and services with third party expertise from our team. You focus on price and features - we'll handle the rest.
FAQ: FREQUENTLY ASKED QUESTIONS
Can you finance software?
All applications software can be financed via a lease or a business loan.
Why lease software?
The ability to spread technology investments over a period of time to match benefits with cash outflows is the primary reason for leasing and financing software. Conserving cash and working capital is another major reason for funding software needs. Many tax and accounting benefits of leasing asset and technology are also important to lessees and users of technology.
What is Software
Computer software, or just software, is the collection of computer programs and related data that provide the instructions telling a computer what to do. The term was coined to contrast to the old term hardware (meaning physical devices). ( Source = Wikipedia )
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