Finance / Leasing options for workstations

DigiMark

Hi all,

Long time lurker, first time poster. The amount of invaluable information on this forum is incredible and very welcome.

We're a technology business, limited in Ireland, have been trading for 2 years 3 months and are doing very well with b2b products and services.

Since we launched, we've outsourced our customer service and technical support operations, scaling where necessary. We've come to a point where we'd like to bring it in house.

We've just secured a lease for the second floor in our building and plan to have our customer operations situated there.

Part of this operation startup is having 15 workstations, and we're looking at finance or lease options. We've spoken to Dell but to be honest, not finding the value.

Can anyone recommend a finance or lease option for what I'm looking for in Ireland?

Thanks.
Mark

Bandara

DigiMark wrote: »

Hi all,

Long time lurker, first time poster. The amount of invaluable information on this forum is incredible and very welcome.

We're a technology business, limited in Ireland, have been trading for 2 years 3 months and are doing very well with b2b products and services.

Since we launched, we've outsourced our customer service and technical support operations, scaling where necessary. We've come to a point where we'd like to bring it in house.

We've just secured a lease for the second floor in our building and plan to have our customer operations situated there.

Part of this operation startup is having 15 workstations, and we're looking at finance or lease options. We've spoken to Dell but to be honest, not finding the value.

Can anyone recommend a finance or lease option for what I'm looking for in Ireland?

Thanks.
Mark

Mark, maybe I'm reading this wrong but what your looking for is finance for 15 computers (i.e. workstations)?

If thats the case I'd presume your also going to need 15 desks, 15 x cabling, routers, phones etc etc etc

Why don't you just go to your bank, give them the accounts, explain what your doing, why your doing it, the benefit to the company by your doing it, and I'd imagine they will be quite happy to roll all the cash requirements for the up into an expansion loan over 5 years (probably would try go for 3 years if you can as stuff gets obsolete pretty quickly). You may have to sign a personal guarantee for the loan but I'm thinking its not going to exceed 25-30k unless you talking about specialised equipment.

Gives you cold hard cash that you can use to drive a better deal than going to Dell etc and getting charged full list without any discount as your availing of their financing option so they know they have you on the hook regardless.

Bear in mind if your taking on 15 staff to man these desks your going to have to pay them from day one and it will really take 4-5 week before you see a savings in your outsourcing costs as I'm guessing you get 30-45 days credit there. Hence maybe ask the bank for a temporary 8 week over draft for the amount of the wages you'll need to outlay for month one. Just a thought. Don't be afraid to ask the bank of this, they will be more receptive than you think as it shows them your on top of your cashflow requirements and are proactively thinking ahead and addressing issues before they arise (ie. your not going cap in hand to them 3 weeks after you spent your loan!)

good luck with it regardless. Sounds like your making a success of it !

DigiMark

Bandara wrote: »

Mark, maybe I'm reading this wrong but what your looking for is finance for 15 computers (i.e. workstations)?

If thats the case I'd presume your also going to need 15 desks, 15 x cabling, routers, phones etc etc etc

Why don't you just go to your bank, give them the accounts, explain what your doing, why your doing it, the benefit to the company by your doing it, and I'd imagine they will be quite happy to roll all the cash requirements for the up into an expansion loan over 5 years (probably would try go for 3 years if you can as stuff gets obsolete pretty quickly). You may have to sign a personal guarantee for the loan but I'm thinking its not going to exceed 25-30k unless you talking about specialised equipment.

Gives you cold hard cash that you can use to drive a better deal than going to Dell etc and getting charged full list without any discount as your availing of their financing option so they know they have you on the hook regardless.

Bear in mind if your taking on 15 staff to man these desks your going to have to pay them from day one and it will really take 4-5 week before you see a savings in your outsourcing costs as I'm guessing you get 30-45 days credit there. Hence maybe ask the bank for a temporary 8 week over draft for the amount of the wages you'll need to outlay for month one. Just a thought. Don't be afraid to ask the bank of this, they will be more receptive than you think as it shows them your on top of your cashflow requirements and are proactively thinking ahead and addressing issues before they arise (ie. your not going cap in hand to them 3 weeks after you spent your loan!)

good luck with it regardless. Sounds like your making a success of it !

Thanks for the input here, really appreciate it.

The infrastructure is already in place with regards to networking, bandwidth, desks and we run our phone system on a hosted new voice media platform so that's entirely scalable from the existing sales and account management teams to include the new customer operation.

We're happy with the changes were making to the inbound channels, including chat and email in a more scalable platform will see an increase in productivity lessening the transition.

The bank is a no go at the moment unfortunately, we've exhausted that Avenue in the last six months with regards to software development and we have an agreement in principle that they need to see x before we ask for y. Which is fine.

Leasing or finance seems the best option for now. We're just struggling to see options outwith a poor Dell deal.

Hopefully someone can jump on with some experience.

power101

1) Could you contact other suppliers and not just Dell or do you specifically want their product?

2) Could you contact another bank?

3) You could contact a financing company. Just google them. The problem is they are often a bit more expensive than a bank...

4) Get second hand equipment to start off with . Upgrade systems one by one as cash becomes free

Bandara

power101 wrote: »

1) Could you contact other suppliers and not just Dell or do you specifically want their product?

2) Could you contact another bank?

3) You could contact a financing company. Just google them. The problem is they are often a bit more expensive than a bank...

4) Get second hand equipment to start off with . Upgrade systems one by one as cash becomes free

This has to be a wind up

antoinolachtnai

What you are doing is a very 'capital intensive' step. You are taking on a lot of risk on for your business and your creditors by taking on this lease, these staff and the equipment you need. It makes you a worse risk than you were before you took on the lease. I know you will say that what you are doing will make the company more profitable and that may be true, if the plan works out. However, if anything goes wrong, then your ability to cut back is greatly curtailed. In the jargon, you have increased your operational gearing.

This is going to make it that bit more difficult to finance this through debt. Leasing is just debt when computers are concerned. Repossessed computers have very little resale value so you won't get finance for them the way you might for a van or a piece of heavy plant. If Dell will do something for you, it might be a great deal.

There are sources doing state-subsidised lending to small business (like http://microfinanceireland.ie) and they might be an appropriate source of finance.