Evaluation_Engineering_October_2020 - 31

vs. purchase. You can also choose to lease the equipment for a
limited duration, and subsequently buy it, if it makes business
sense. You don't want to pay a rental amount that's eventually
more than the actual cost of the instrument.
Cash flow in the company's books
Companies manage their expenses based on the cash flow
in their books. If you have high sales and profits, you may have
sufficient cash flow to lease or outright buy the equipment.
However, for startups with limited cash flow, it makes sense
to pay a small rental amount every month that complements
the available sales and profits. But then, once again, you may
have to factor in the additional cost of certifications and regular
calibration.
Tax liability
Buying expensive electronic test equipment costs tens of
thousands of dollars. Large companies sometimes choose to
offset their annual tax liability by buying the expensive test
equipment outright and showing it as an expense in the books.
This decision often lies with the senior management, accounts
department, and tax advisors of the company.
You mustn't forget the cost of maintenance and possible obsolescence, and decide accordingly. Check with your supplier
if they provide a buy-back option, which may recover some of
the money you invested.
"According to a study by Frost & Sullivan, test equipment is
effectively used for only 15-20% of its entire lifetime, leaving an
expensive graveyard of obsolete instruments."
Terms & conditions of the agreement
It's important to read all of the terms and conditions, including the legal fine print in the agreement that you sign with the
supplier. You don't want to get stuck with long-term inflexible
contracts that end up costing you more than the cost of purchasing the equipment.
If you're a large company that needs multiple test equipment
for a longer time, you can also ask for an attractive payment and
post-sale service terms.

Renting, Leasing and Buying Options
Renting Options (Short-term)
It's suitable for the following scenarios:
*	 Temporary planned or unplanned projects.
*	 Peak load capacity requirements.
*	 Existing test equipment is out for maintenance or training programs.
With renting, you have no fixed time commitment and have
the freedom to go for flexible short-term contracts. You needn't
worry about obsolescence, maintenance and repairs, compliance, and regular calibration of the equipment. The supplier
takes care of it and includes its cost in the monthly rent. You
can also rent and test new technology before buying.
Leasing Options (Long-term)
Go for a lease if you can already foresee the time limit that you
need to own the equipment. You can pay the fee as a one-time
amount or a monthly installment, but the duration of the lease
is pre-decided. Choose from the following options:

*	 Finance lease: Many customers who lease the equipment
often end up buying it from the supplier after the lease
period expires. In a finance lease, the contract is drafted
such that the ownership of the equipment lies with the
lessee at the end of the term.
*	 Operating lease: If you don't want to own the equipment
at the end of the term, you can opt for an operating lease
where the ownership will be retained with the supplier at
the end of the term.
*	 Operating lease with services/Service lease: This is the most
convenient, but at a slightly higher cost. In an operating
lease with services, the supplier takes ownership of maintenance, repair, compliance, and calibration-related jobs
for the duration of the lease.
Purchase Options
This is the preferred option for large companies who need
multiple equipment and have to use them frequently. Such companies often work on large projects and may want to offset tax
liability with fixed asset purchases.
*	 New equipment: As the name suggests, these are brand new
products customized and calibrated to your project needs.
*	 Pre-owned/ refurbished equipment: These are slightly
cheaper pre-owned and used testing equipment that was
bought back by the supplier or returned after the lease
period was over. Such equipment goes through rigorous
functional checks, calibration, compliance updates, and
cleaning to make sure that they give optimal performance.
Regardless of new or pre-owned equipment, you get attractive
financing options, discounted rates, limited or lifetime warranties, and full-service support.

Choosing Your Electronic Test Equipment Supplier
No matter what your decision-whether renting, leasing, or buying-it all comes down to working with a high-quality equipment
supplier that provides you flexibility in the terms and conditions,
attractive pricing and great post-sales service:
*	 Begin by looking at the range of products offered by the supplier. The higher the range, the more options you will have
to source your entire requirement from a single supplier.
*	 The supplier's technical team should have enough experience to advise you on the right product in your budget.
*	 Check the supplier's market reputation and its client base.
*	 The supplier should be able to provide you all of the options,
including renting, leasing, and buying, as well as calibration services.
*	 The equipment supplier should be able to provide both new
and used/refurbished products.
Electronic test equipment continues to evolve, and that makes
buy, lease, or rent decisions more complex. But based on your
company's size, budget, and other requirements, the above actionable points should make your job easier.
Amanda Wilson is an established freelance writer who has built her
career focusing on the electrical and electronic test equipment and
measurement industry.
OCTOBER 2020 EVALUATIONENGINEERING.COM

31


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Evaluation_Engineering_October_2020

Table of Contents for the Digital Edition of Evaluation_Engineering_October_2020

Instrumentation vs. Telemetry
By the Numbers
Automotive Test
Industry Report
Automated Test
Tech Focus
Testing Quandary
Signal Generators
Autonomous Vehicles
Automotive Test
Instrumentation vs. Telemetry
Instrumentation vs. Telemetry
Automated Test
By the Numbers
By the Numbers
High-Speed Digital
Industry Report
Industry Report
Testing Quandary
Tech Focus
Featured Tech
Autonomous Vehicles
Evaluation_Engineering_October_2020 - 1
Evaluation_Engineering_October_2020 - 2
Evaluation_Engineering_October_2020 - 3
Evaluation_Engineering_October_2020 - By the Numbers
Evaluation_Engineering_October_2020 - 5
Evaluation_Engineering_October_2020 - Industry Report
Evaluation_Engineering_October_2020 - Tech Focus
Evaluation_Engineering_October_2020 - Signal Generators
Evaluation_Engineering_October_2020 - 9
Evaluation_Engineering_October_2020 - 10
Evaluation_Engineering_October_2020 - 11
Evaluation_Engineering_October_2020 - 12
Evaluation_Engineering_October_2020 - 13
Evaluation_Engineering_October_2020 - 14
Evaluation_Engineering_October_2020 - 15
Evaluation_Engineering_October_2020 - Automotive Test
Evaluation_Engineering_October_2020 - 17
Evaluation_Engineering_October_2020 - 18
Evaluation_Engineering_October_2020 - 19
Evaluation_Engineering_October_2020 - 20
Evaluation_Engineering_October_2020 - 21
Evaluation_Engineering_October_2020 - 22
Evaluation_Engineering_October_2020 - 23
Evaluation_Engineering_October_2020 - Automated Test
Evaluation_Engineering_October_2020 - 25
Evaluation_Engineering_October_2020 - 26
Evaluation_Engineering_October_2020 - 27
Evaluation_Engineering_October_2020 - High-Speed Digital
Evaluation_Engineering_October_2020 - 29
Evaluation_Engineering_October_2020 - Testing Quandary
Evaluation_Engineering_October_2020 - 31
Evaluation_Engineering_October_2020 - Featured Tech
Evaluation_Engineering_October_2020 - 33
Evaluation_Engineering_October_2020 - Autonomous Vehicles
Evaluation_Engineering_October_2020 - 35
Evaluation_Engineering_October_2020 - 36
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