Taking the Mystery Out of Software Financing and Software Leasing

Taking the Mystery Out of Software Financing and Software Leasing

Free Online Articles Directory

Why Submit Articles?
Top Authors
Top Articles
FAQ
ABAnswers

Publish Article

0 && $.browser.msie ) {
var ie_version = parseInt($.browser.version);
if(ie_version Login

Email

Password

Remember me?
Lost Password?

Home Page > Business > Small Business > Taking the Mystery Out of Software Financing and Software Leasing

Taking the Mystery Out of Software Financing and Software Leasing

Posted: Dec 19, 2007 |Comments: 1
| Views: 298 |

]]>

The very terms âsoftware leasingâ and âsoftware financingâ are confusing to many businesspeople. This is due to the fact that software is typically not seen as something that is purchased over time.

This view is shared by both end-users, and the developers of software. Companies who think nothing of financing a vehicle or a new computer system will stress over how they will pay for expensive new business software. And the producers of software see no need for offering a software leasing or a software financing option.

But times are changing.

Third party equipment finance companies – companies who offer small and medium size businesses equipment financing and working capital â have responded to a need for software financing and software leasing. Thus, they are starting to include software amongst the equipment they finance or lease. There is one big overriding reason for this shift:

The High Cost of Buying Software

The simple fact is this: Software can be very, very expensive. Oftentimes more expensive than the hardware that runs it.

Now, keep in mind that when we are talking about software in this way, we are generally talking about âvertical softwareâ. Vertical software is software that is written for a specific, narrow industry (this can include industry-specific point-of-sale software, ERP systems, specialized databases, etc). It is not software thatâs available on the shelf at your local office supply store (the software you see there, even the business programs and operating systems, are âhorizontal softwareâ â they can be used across a variety of industries, and are relatively affordable.)

A good, clear example of vertical software is an auto parts store – they use software thatâs specifically written for the auto parts industry. Another example is your local jewelry retailer â they likely use a point-of-sale system specifically made for the jewelry industry.

To understand how software financing and software leasing can positively affect a business, it is important to understand the advantages of vertical software first.

For most businesses, Vertical Software usually means far more efficient business processes. In the case of an auto parts store, for example, the software will already anticipate the thousands of automobile makes and models. And will almost certainly be updated every year. The jewelry storeâs software will differentiate the subtle differences between two diamonds by any number of categories. And so on.

In fact, these âverticalâ software programs are so effective, and become so crucial to day-to-day operations, that businesses often need this type of software to remain competitive. In many cases, itâs not an option to do without.

However, since the software is so narrowly focused, it usually comes with a hefty price tag. The developer will sell relatively few copies as opposed to a word processing program (which will sell in the millions), so they must get a premium for their work. Vertical software can sometimes reach five figures for a single license.

This brings an obvious problem: âBusinesses need the software, but itâs very costly to buy outright.â

And thatâs where software leasing and software financing come in â business donât have to âbuyâ it upfront.

The Advantage of Software Leasing and Software Financing

The advantage of financing or leasing software is clear:

Software leasing and software financing take the huge up-front cost of new software out of the equation. Like most other business equipment, software is now beginning to be seen as a tangible asset (this was not always the case.) This means software can largely be treated as any other equipment purchase in the case of financing or leasing. A business can finance that new ERP system instead of having to budget a huge cash outlay.

This can be very beneficial to the bottom line, as software generally pays for itself over time. In fact, since âverticalâ software almost always reduces the cost of doing day-to-day business, leasing or financing said software can actually create a positive cash flow right away.

But Who Offers Software Financing or Software Leasing, and how does it Work?

Itâs true that software developers have been very slow to embrace the business model of software financing or software leasing. They would prefer to be paid up front for their software.

Likewise, banks, being part of an âolderâ industry, are also largely reluctant to finance software.

However, third party equipment finance companies who specialize in small and medium sized business equipment financing often offer attractive software lease and software financing packages. What happens is the equipment finance company pays the developer in full, and then provides the software to the end user under a finance or lease agreement, often at very attractive rates. In all actuality, itâs fundamentally the same as financing or leasing most other equipment.

Of course, like any other financing, the agreements can (and will) vary from traditional fixed rate financing to a âsoftware leaseâ with a buyout at the end, etc. And the rates and terms also vary â your individual equipment finance company will have more details.

All in all, software financing and software leasing have definitely entered the business consciousness, and because it is so friendly to the bottom line, it is a business model that is here to stay.

Software leasing and Software financing are only a few of the services provided by Crest Capital. Regardless of the size of your company, Crest Capital can provide you with the equipment financing and working capital you need to successfully grow your business. Learn about financing options that can increase your bottom line and reduce your 2007 tax bill with a free online quote today.

Retrieved from “http://www.articlesbase.com/small-business-articles/taking-the-mystery-out-of-software-financing-and-software-leasing-286030.html”

(ArticlesBase SC #286030)

Watch your traffic increase just by submitting articles with us, click here to get started.
Liked this article? Click here to publish it on your website or blog, it’s free and easy!

Sean Marten -
About the Author:

Software leasing and Software financing are only a few of the services provided by http://www.CrestCapital.com/. Regardless of the size of your company, Crest Capital can provide you with the equipment financing and working capital you need to successfully grow your business. Learn about financing options that can increase your bottom line and reduce your 2007 tax bill with a http://www.crestcapital.com/equipment_lease_calculator free online quote today.

]]>

Questions and Answers

Ask our experts your Small Business related questions here…

Ask

200 Characters left

What are the basic requirements for a mlm software development company?
A finance company just bought my friends house back because it was forclosed on and even though she filled out hardship paperwork,they say they never received them what to do to get house back?
How many software companies in the us?

Rate this Article

1
2
3
4
5

vote(s)
1 vote(s)

Feedback
RSS
Print
Email
Re-Publish

0) {
ch_selected = Math.floor(Math.random()*ch_queries.length);
if(ch_selected == ch_queries.length) ch_selected–;
ch_query = ch_queries[ch_selected];
}
}catch(e){
ch_query = document.title;
}
]]>

Source: http://www.articlesbase.com/small-business-articles/taking-the-mystery-out-of-software-financing-and-software-leasing-286030.html

Article Tags:
software leasing company, software financing company, software leases

Taking the Mystery Out of Software Financing and Software Leasing

Leave a Reply Cancel reply

Recent Posts

Recent Comments

Archives

Categories

Meta