There’s no getting around it, inflation is out of control at the moment. UK inflation rates have risen to a 40-year-high of 9%. What this means is the price of goods is becoming more and more expensive by the day.
In the article, we’re going to look at five ways your school can use equipment leasing to overcome the drawbacks of rising inflation rates.
Problem Statement
Inflation is significantly affecting schools' budgets, making it harder to invest in necessary technology. With rising costs, schools are seeing their purchasing power diminish, resulting in fewer resources available for critical investments.
This inflation impact on school budgets is leading to tough decisions, where institutions are forced to choose between essential upgrades and other variable costs. Technology investments, such as iPads and computers, are becoming particularly challenging to afford, further exacerbating the need for smart financial strategies to overcome inflation in education.
1. Lock in Your Rate Before Prices Increase
One of the benefits of leasing, especially in an inflationary market, is that your monthly lease price will be based on the price of the equipment when you sign the lease. However, you will be spreading the costs of the equipment over months or years.
It is best to lock in a price now and avoid price hikes in future. Take a look at our guide to leasing iPad's for schools.
2. Reduce Time to Purchase
You may think, that’s fine but if I own the equipment, won’t I benefit from the increase in value?
Possibly, however, you need to account for depreciation of used equipment value. What’s more, larger purchasing decisions often have increased purchase cycle times. While waiting for your school to raise funds or sign off on a large equipment cost, it’s likely that… in this market, prices will have gone up.
3. Provide Clarity on Future Costs
By having a fixed annual cost, your finance department will be able to accurately budget and forecast. Something that will become increasingly important as we all begin to feel the squeeze of inflation.
4. Retain Free Capital for Other Variable Costs
Leasing allows you to spread the cost of your equipment over years if needed. The alternative is to purchase the equipment outright. This huge upfront financial burden can severely impact a school's finances for the coming year. By leasing equipment, you can ensure that free funds are still available to pay for variable expenses. Many of which will be increasing in price. For example, energy bills.
5. Ensure Correct and Quality Purchases
When you decide to purchase equipment upfront you often have to compromise based on what you can afford at the time. This can lead to substandard or not fit-for-purpose equipment that may need replacing much sooner than if you were to have leased the most appropriate equipment from the outset. It can also result in equipment purchases being split over multiple years resulting in different models of equipment in the same classroom. Depending on the technology involved this can have a significant impact on classroom dynamics and complicate teaching and learning.
Cost-Benefit Analysis
When comparing leasing versus purchasing, the benefits of leasing become more apparent in a climate of rising prices. For instance, leasing allows schools to spread the cost of £50,000 worth of equipment over several years, avoiding a massive one-time expense.
In contrast, purchasing the same equipment upfront may not only deplete budgets but also require additional funds as technology prices increase. Leasing benefits for schools include fixed costs and the ability to manage cash flow more effectively — an ideal solution for education cost management.
Find Out How Leasing Equipment Can Benefit Your School
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