The Seven Deadly Sins of Telecoms – Lust

lust

Phone manufacturers are always tempting customers with new features as a means of upgrading their systems, or encouraging them to buy more than they need.  Such as the latest video phones, collaboration systems or presence.  Whilst these can all be useful they do not benefit everyone. 

But lots of people like shiny new toys –  just think how many get an upgrade everytime Apple brings out a new iPhone.  But phone systems cost a lot more than one handset does. Therefore when companies want to get all the latest features they often think that the only way to afford this and to avoid a high upfront cost is to sign a long lease.

Leasing can create a number of problems and so should be used with care.  Some keys points to consider are:

1. Is the lease for hire or purchase?  We met a number of organisations who thought that they would own the equipment at the end of the lease. Only to find that they had paid for a system several times over but did not own it and yet still had to keep on paying.

2. What is the length of the lease?  Telecoms technology changes about every 15 months. Signing a lease for five or more years could mean committing to regular expensive upgrades or consigning your organisation to working with obsolete technology.

3. What is included in the lease? We have seen announcement recordings, training etc included in a lease yet these have no ongoing value to the lease company should the payments be stopped.

4. Check the actual purchase price of the equipment and compare it with the total cost of the lease.  The interest rate should also be shown in the terms.  There have been cases of suppliers inflating the purchase price 6 or 7 times.   Three directors of a company called Business Telecoms were sent to jail in 2011 for conning  small businesses, charities and schools out of hundreds of thousands of pounds http://www.bbc.co.uk/news/uk-england-13214888

5. We have also seen some companies try to pass off old equipment in the form of a lease.  Read more in our blog on how charities are being scammed. https://www.equinox.uat.3mil.co.ukcharities-being-ripped-off/

This is not to say that leases cannot be good value. For instance they can be worthwhile sometimes, particularly if there is a genuine 0% or very low interest rate.  But they are only a good deal if the businesses genuinely needs those features and if they will help the company.

If you need some advice then please contact us on 020 8912 0845.