Capex vs Leasing in Schools: How to Maintain the Same Yearly Expenditure and Improve Your Technology

Small devices such as laptops, tablets and mobile phones have a useful life of three to five years. For schools looking to ensure their staff and students have access to the latest technology, buying these assets using CAPEX can be a significant upfront cost every few years. Not only can this tighten cash flow, but it also increases the total cost of ownership (TCO) for your assets as tasks such as decommissioning and correctly disposing of unwanted, unused or broken devices remains your responsibility. Keep reading to learn how leasing can help your school maintain or even reduce your annual expenditure while improving the devices available to your students and staff.

When to buy and when to lease technology

There are scenarios where it may be better to buy assets using CAPEX. For a school, this may include property, infrastructure, equipment, and software licenses. While the times when CAPEX is more suitable will depend on your school’s operations, it’s important to remember the upfront costs associated with buying an asset. For example, purchasing on-premise IT infrastructure such as servers may be a good investment from a security standpoint, but the maintenance and space required to physically house the equipment are added costs to consider. Similarly, depreciating assets such as vehicles may seem like a wise CAPEX investment if your school has access to low-interest financing. However, these vehicles will need to be held for longer than if the vehicles were leased, meaning that your school will incur growing maintenance and repair costs the longer the assets are in use.

Your school’s total cost of ownership (TCO) can be reduced by leasing

The TCO for an asset includes the direct and indirect costs associated with acquiring, operating and maintaining an asset throughout its useful life. Calculating the TCO for an asset can be a complex process, especially for IT equipment. Some of the factors that need to be factored into calculating the TCO for devices include removal and disposal of legacy assets, installation costs, software upgrades (if required), hosting, maintenance, consumables (e.g. printer paper and ink), staff training, repair costs, downtime for upgrades, and helpdesk support.

For bursars and finance managers, taking the time to thoroughly calculate the TCO for assets such as IT equipment and vehicles can help you identify where your school can gain access to better equipment without a large upfront CAPEX investment. This allows schools to spread an asset's direct and indirect costs throughout its useful life.

Disposal costs and your environmental footprint can be reduced with leasing too

The world generates 40 million tons of e-waste each year, which is the equivalent of throwing 800 laptops in the rubbish every second. As environmental, social and corporate governance (ESG) factors become increasingly important to people and organisations, correctly decommissioning and disposing of devices is critical. Through leasing your school’s devices, these become part of the sustainable technology lifecycle. This means that devices are correctly decommissioned and recycled or prepared for a “second useful life,” which reduces waste and helps those in need access the technology they may not have been able to access before.

Access the best technology without increasing your CAPEX with Quadrent

Using leasing to access the latest technology can help your people be more productive and give your school the tools it needs to deliver positive learning outcomes. Instead of asset purchases being a large one-off spend every few years, the cost of your assets is spread across the lease term, with end-of-lease activities such as decommissioning and recycling managed by the lessor. Not only can this reduce your CAPEX, but it can also help your school get better equipment without increasing annual spending. And with the ability to manage these leases effectively through dedicated lease accounting software, your finance team will be able to derive value from the data gathered throughout your leasing periods to drive proactive resource planning.

Quadrent’s asset leasing and financing solutions for the education sector help schools ensure they always have the best systems and hardware available for their teachers and students. Contact Michael Adams today to learn more about how Quadrent’s solutions can support your school in strengthening its people management.