Getting your IT project approved: The benefits of monthly payments
Posted on July 10, 2024 by Tatania Riley
Let’s face it, every organisation has conflicting demands on their budgets, and managing cash flow is a top priority for every FD. IT projects can often be big ticket items, and whilst the organisation might be keen to press ahead with the thing that will increase security or improve efficiency, timing is everything when it comes to costs. That’s why many organisations we work with, look to take advantage of IT Project Finance, to spread costs into monthly payments.
Here’s how monthly payment plans can make project approval easier and more financially sound, along with some tips for overcoming common internal objections.
Improved Cash Flow Management
One of the most compelling benefits of monthly payments is improved cash flow management. Instead of requiring a large initial investment, monthly payments spread the cost over time, aligning with your company’s revenue cycle. This approach eases financial pressure and reduces need for methods like Capexing or waiting for next year’s budget to arrive.
Tax Advantages of Leasing
Leasing offers significant tax benefits. According to IT Finance specialists, Reality Finance, lease payments can often be deducted as a business expense, reducing taxable income and enhancing your company’s tax position. By choosing to lease rather than purchase outright, your business can take advantage of these tax deductions, making the financial case for your IT project even stronger.
For more details on the tax advantages of leasing, visit Reality Finance.
Budget Predictability
Monthly payments provide consistent, predictable expenses, which simplify financial planning and forecasting. This predictability helps align project costs with the company’s overall budget and financial goals. Consistent monthly outlays are easier to accommodate and justify to upper management, making the approval process smoother.
Enhanced Financial Flexibility
Monthly payments provide greater financial flexibility by preserving capital. This allows your business to allocate funds to other critical areas such as marketing, hiring, or research and development. It also enables you to undertake multiple projects simultaneously without overextending financially.
Frequently asked questions
“We’re worried about committing to long-term payments.”
Response: Monthly payments offer predictability and ease of management. By comparing the overall costs of leasing versus buying, you can see how spreading payments over time can result in cost savings and additional tax benefits.
An example of this could be:
| Total Cost of Project | £10,000.00 |
| Monthly Payments spread over 12 months | £928.80 |
| Tax Relief | £2,117.66 |
| Net Cost | £9,027.94 |
“It is better to own assets outright.”
Response: Leasing provides the advantage of using the asset without the immediate cost of ownership. There are lease-to-own options, which allows you to eventually own the asset after the lease term. This approach combines the benefits of both leasing and owning, without the initial financial strain.
Considering a monthly payment plan for your IT project can significantly improve your chances of getting approval. It offers financial flexibility, improved cash flow management, and budget predictability. Additionally, the tax benefits of leasing make it a financially sound option.
For further information on how monthly payment plans can benefit your business and help get your IT project approved, visit Reality Finance.
