Opinions on the benefits achievable through rental and maintenance contracts vary markedly. On the one hand, more value can be gained by owning something, while on the other ownership has long-term cost implications.
Take two examples: one of renting versus owning a building; and another of renting versus owning document output equipment such as photocopiers, fax machines and printers.
When it comes to property, regardless of the reasons for occupying that space, there is a great deal to be gained from owning. This mostly lies in the fact that repayments on bonds go to increasing your asset base; and while the total cost of ownership of a building or house is high, the costs associated with repairs, maintenance and expansion are always there, whether the structure is being rented or not (albeit to a lesser degree in renting situations). Renting that property over a contracted period sees your money being absorbed by the owner of that asset, which isn`t you. Therefore, a strong financial case can be made against the rental contract where large assets are concerned.
However, the same cannot always be said when considering much smaller items such as document output equipment. Owning such machinery may add to your asset register, but it also significantly adds to your maintenance and repairs bill, unless a maintenance contract is in place.
Renting equipment that would not markedly improve asset accumulation, and supporting this with a maintenance contract is the best way to go.
Firstly, the monthly rentals are a fixed, budgeted amount so there are no undue and unmanageable financial surprises that can leave you in the red, or bulky initial cash outlays, or mechanical issues that prevent you from being able to print, copy or fax; a potentially disastrous situation that is best avoided.
Secondly, when the product reaches the end of its workable life span it can be replaced with similar or new equipment without requiring any significant capital expenditure. The rental contract is simply revised and you carry on operating as normal.
Key to peace of mind
Covering the repair and maintenance of machines with a maintenance contract, whether in the rental or ownership situation, is key to peace of mind. It is the equivalent of buying a R500 000 car without a service plan, or renting a car without covering yourself with insurance. It is the same as buying a house but not taking out building insurance or not buying some form of medical aid. If a fire razes your house to the ground, without that insurance you are homeless and substantially out of pocket. If you suddenly take ill and need to be hospitalised, that cash outlay can be devastating. Repairs and services on costly vehicles can be debilitating when they are paid for in cash; and if you have an accident in a rented car, you will surely suffer more than simply physical pain.
The same applies when buying or renting office document output equipment. If something goes wrong on any of the devices and there is no maintenance contract to cover repairs, be prepared to fork out unexpected amounts of cash to fix the problems, or lose productivity because staff do not have the necessary equipment to perform their jobs.
More than that, much larger consumable bills follow all the low-cost, seemingly affordable printers doing the rounds and even if you opted to avoid this deception, consumables are still a major cost factor on printing, faxing and copying equipment.
All of these factors are covered in the maintenance contract. This agreement with the supplier, or the leasing organisation, is essentially your insurance net, preventing you from incurring additional repair and consumables costs when least expected.
Maintenance contracts are your insurance, medical aid, service plan; giving the assurance that your document output environment always operates at maximum capacity, with the best quality output, without costing a pound of flesh when least expected.
* Bytes Document Solutions is the sole authorised distributor of Xerox products and solutions in sub-Saharan Africa.
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As the authorised Xerox distributor to 24 sub-Saharan countries, Bytes Document Solutions, previously known as Xerox South Africa, is engaged in the marketing and servicing of the complete range of Xerox document equipment, software, solutions and services, and operating through an extensive network of dealers, concessionaires and channel partners. With black economic empowerment partner Kagiso Holdings owning a 27% stake of the business, it is a wholly owned member of the JSE Securities Exchange-listed Bytes Technology Group.
For more information on Bytes Document Solutions and Xerox, visit www.xerox.com/news.
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