Comm3 offers straight talk about telecom equipment maintenance and financing.

Many companies don’t consider “maintenance” when acquiring new telecommunications equipment, until it’s too late! In most cases, someone probably told them the equipment is covered by a manufacturer’s warranty. They neglected to mention the warranty only lasts for a year. Or, they’ve been informed that the system is extremely reliable and seldom fails. Or, they heard that it’s cheaper to just pay for time and materials in the event of an outage. Or, they think maintenance is too costly. Any or all of these reasons could end up costing you tens of thousands of dollars down the line.

Maintenance should be a critical component of your buying decision. Today’s telecom equipment is reliable, compared to 20 or 30 years ago. But, as modern technology becomes more complex, so do support and training issues. Your telephone system is the lifeblood of your business. You can’t afford extended down time. You need reliable and timely protection and you need it on an ongoing basis.

The most efficient method of handling maintenance is to acquire your new equipment with a TAMCO financial program (see “Payment Options”) and its multi-year “pass-through” maintenance feature. With TAMCO, labor costs for your vendor’s maintenance contract are locked in at today’s rates in your agreement. (This becomes increasingly important because rates are soaring due to complex applications and additional technical certification requirements.)

TAMCO “pass-through” maintenance expenses are amortized over the total term with no finance charges resulting in the smallest possible monthly charge. Example: Total maintenance expense of $4000 on a five-year agreement is billed at $66.67/month even though a product warranty covers the first year. The $4000 is spread over the entire five years.

Maintenance costs will be “bundled” into the same invoice, as your equipment so there’s just one check to write each month. Maintenance is an issue that could critically impact your business operation. Be sure you cover this important subject with Comm3 before making decisions.

Selecting the right equipment is just part of your telecomm decision. When working with Comm3 on a new telecom system, you’ll spend most of their time evaluating hardware, features and pricing. Although these are important, there are several other considerations that may have an impact upon your decision, including: the kind of warranty the equipment has and the type of maintenance, if any.

However, the one factor that many people overlook is “How are we going to pay for it?” And, this last issue could save you (or cost you) thousands of dollars. Let’s take a look at various methods for acquiring your new phone system.

Buy it
When you buy a telecom system, you either pay for it with your own cash or borrow money from a bank or other lending institution. At first, this may appear to be the best way to proceed, but several concerns quickly arise. You will be using precious capital to pay for a depreciating asset. Wise investors have often said, “Buy things that appreciate. Rent things that depreciate.” A telecom system loses much of its value the day after it’s installed. Is this the kind of asset you want on your balance sheet for the next several years?

Lease It
Another method of acquiring a new telecom system is to lease it. This usually means signing a contract for a FMV or $1 Out lease. The two major differences between these instruments concern accounting considerations and what happens at the end of the lease. The FMV lease usually qualifies for off-balance-sheet financing and allows you to return the equipment at the end of the term or purchase it for “Fair Market Value.” Fair Market Value at some point in the future is somewhat iffy. A $1 Out lease does not qualify as an off-balance-sheet item and allows you to purchase the equipment for $1 when the contract expires.

Both types of leases obligate you to a series of payments for ownership thus giving you all the responsibility of the system. And, there is one other major concern. Namely, you are not protected from the uncertainties of changing business conditions and technology. Leasing contracts contain time restrictions, balance rollovers and other limitations.

Therefore, if your communications needs change and you need to replace your equipment or move to new technology, you’re stuck! Leasing means you lose future flexibility because you may have to pay off existing contracts or roll unpaid balances into a new agreement.

Shield It
Now, there is an innovative and unique method of acquiring new telecom equipment, TAMCO Shield®. The TAMCO Shield program functions like a rental with many of the desirable features of a lease. There’s a big difference between Shield and traditional leasing.

This program allows you to move the risk of ownership to TAMCO. All other financial options leave the risk with you. Look at TAMCO Shield as a monthly “right-to-use” fee. The cost is not a payment toward ownership; it is the right to use the equipment until your business needs change, giving you the ultimate flexibility.

You pay the usage fee and at the end of the term there are several options allowing you to renew, own the equipment or acquire new equipment. If you really want ownership in three or five years, you can decide then.

The best feature of TAMCO Shield is that it affords protection from the uncertainties of business and technology changes because you can move to new technology or a new system at any time without financial penalty. No waiting period, no rollover, and no hidden costs. Your old agreement is literally torn up and a new one is issued.

TAMCO takes on the risk of ownership…not you. With TAMCO Shield, equipment qualifies as an off-balance-sheet item and you gain the benefit of fully tax-deductible payments. Plus you preserve cash, protect credit lines, and add the flexibility to adapt to changing business needs.

Which Acquisition Method is Best?
There is no one right answer to this question. We invite you to explore all of your financial options when deciding how to pay for your new equipment.