By spreading the costs of new technology solutions over time and focusing on a usage model, businesses can maximise cash flow, conserve capital budgets and retain the flexibility to embrace new network technology advances at any time.

The following is an outline of the different financing structures available from Cisco Capital.

Finance lease

A finance lease is a capital lease, or hire purchase, that allows clients to combine some of the benefits of leasing with those of ownership. At the end of the lease term, clients have the right to purchase the equipment, usually for a fixed nominal sum. For tax and accounting purposes, clients are deemed to own the equipment from day one of the lease term. Although such leases do not address the risks of technology obsolescence, they do provide clients with an easy tool for cash flow or budget management.

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Operating lease

Operating leases are designed for businesses which seek constant access to the latest technology without the burden and risks of ownership. A projected residual value is deducted upfront from the solution cost, thereby lowering monthly repayments and total deployment cost. At the end of the initial term, clients have the option to return the equipment, or upgrade in whole, or in part, to newer technology.

Clients may also extend the lease, or buy the equipment at Fair Market Value. Operating leases shift the risk of technology obsolescence and the burden of end-of-life equipment disposals away from your business.

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Sale and leaseback

Sale and leaseback helps businesses migrate to Cisco solutions and overcome the obstacle of legacy equipment and outstanding leases; thereby avoiding asset write-offs during technology migration. Cisco Capital will purchase the network equipment already owned by a business, before leasing back those assets. These transactions are designed for businesses which need to purchase assets first, for tax or other reasons, before leasing them. Businesses may also opt for sale and leaseback for purposes of balance sheet management, cash flow considerations, or when outsourcing network management to a telecommunications service provider or specialised network outsource company.

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Services financing

Cisco Capital allows clients to bundle Cisco maintenance and services solutions together with their equipment lease into one easy payment. Services that can be included are for Cisco delivered contracts such as Advanced Services, SMARTnet and Technical Support Services.

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Technology migration

This option helps businesses avoid the problem of having to cope with an unexpected need to upgrade technology – a major concern for Financial Directors. It provides businesses with the ability to migrate/upgrade to new technology before the lease term is ended. This option is ideal for businesses preferring to plan for partial or large scale upgrades and for retaining the flexibility of adopting new technologies as they become available.

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