Why Software Financing Makes Sense

By | April 10, 2015

software leasing and financingIn this blog, I talk a lot about equipment financing and leasing, Section 179, how they relate, and a myriad of other topics. But it occurs to me that I never discuss the actual products that are financed and leased, and why a company would want to do such. So that’s what this post (and others in the future) will cover.

Let’s start with software financing / software leasing. Why would a company finance software instead of waiting until it was financially practical to outright buy it? The reasons are several:

  • It allows a company to stay technologically competitive– In many industries, having cutting edge software makes you more efficient, and, depending on the software, allows you to expand your products and/or services (think of CAD software for a product manufacturer, or better logistical software for a transportation company). In any case, to stay competitive, many companies need new software, and it can’t wait until next year. And some equipment financing companies (like mine) offer “software only financing”, which is attractive.
  • It allows for more purchasing power and extras, like training and support– Software financing is sometimes “added in” with hardware purchases. In other words, a company will come to an equipment financing company meaning to finance hardware, but they find they can also finance new software in the same “deal” (even if the software is from another company). Plus, training and support agreements can be financed as well, allowing a company to take full advantage of their new software.
  • It protects against obsolescence– Many times, upgrades and such can be added to an existing software financing agreement, protecting a company against “maybe we should wait, because the new stuff is coming out next year”. Instead, that becomes “let’s get it now to stay ahead of the competition, and plan on upgrading next year”.

Times have definitely changed. Good equipment financing companies recognize that software is a very important part of many companies, as important as a sign, machines, and office furniture. Thus, they make financing software as easy as financing any of those other items. This is welcome news to customer’s ears.

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