Hewlett packard financial services: a comprehensive guide

In the dynamic and ever-evolving world of business, companies often require access to the latest technology and equipment to stay competitive. However, purchasing these assets outright can be a significant financial burden. This is where Hewlett Packard Financial Services (HPFS) steps in, offering businesses a flexible and cost-effective solution for acquiring the assets they need.

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What is HPFS Hewlett Packard?

HPFS, a division of Hewlett Packard Enterprise, provides leasing and financing options to businesses looking to acquire assets without the need for immediate full payment. With HPFS, companies can make an initial deposit and pay the remaining balance, including interest, over a predetermined period of time. Once the payment is complete, ownership of the asset is transferred to the customer.

hewlett packard financial services - How does HP leasing work

It is important to note that the accounting and tax treatment of leases can vary depending on the type of lease. For instance, a finance lease is treated as a loan funding the asset, and the tax treatment follows the legal form of the transaction, which is the hiring of an asset. It is advisable to consider the tax implications when deciding how to finance an asset purchase.

How does HP leasing work?

HP leasing is a popular choice for industries that require expensive machinery, such as construction, manufacturing, printing, and transportation. It can also be used to finance other capital requirements of a business, including smaller items like cars and photocopiers.

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When opting for HP leasing, the lessee does not have ownership rights to the asset. At the end of the lease contract, the lessee typically has three options: extending the lease, returning the asset, or introducing a buyer for the asset. In some cases, the original lessee may be entitled to a refund of 95% of the sale proceeds if they introduce a buyer. The refund amount will depend on the terms of the contract.

One of the advantages of HP leasing is that it allows companies to control and deploy assets without a significant drain on working capital. The fixed-rate funding makes budgeting easy, as the lessee has a clear understanding of future expenditures. Additionally, the flexibility of repayment structuring allows for seasonal businesses and reduces monthly outlay by factoring in a 'balloon' payment at the end of the term.

Another benefit of leasing is that it prevents the risk of an asset depreciating quickly and provides flexibility to enter into a new contract at the end of the original lease's fixed term. Financing asset purchases through leasing can also be more tax-efficient than standard-term loans, as lease payments are booked as expenses. However, it is essential to consider the usable lifetime of the asset and local regulations regarding asset depreciation.

hewlett packard financial services - What is HPFS Hewlett Packard

HP leasing offers high accessibility to financing for businesses, as the financing is secured with the leased asset, and the asset is owned by the financing company. In certain circumstances, maintenance may also be included within the terms of the agreement.

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Despite the numerous advantages, there are a few disadvantages to consider when opting for HP leasing. The total sum of capital payments for leasing will be higher than the full payment for an asset purchase. Additionally, administrative complexity and costs may increase if any covenants are applied to the arrangement, such as updates on change of equipment locations. Early termination charges or restrictions on subleasing may apply if the business changes its strategy, rendering the leased asset no longer useful.

Other Financing Options

While HP leasing offers a medium- to long-term solution for asset acquisition, businesses may also consider other financing options. For example, a bank loan allows firms to purchase an asset and gain immediate ownership.

The right finance for your business depends on various factors, including the type of trading and the size of the business. It is important to explore different financial structures and consult with professionals to determine the most suitable option.

Hewlett Packard Financial Services (HPFS) provides businesses with a flexible and cost-effective solution for acquiring assets through leasing. HP leasing allows companies to control and deploy assets without significant drain on working capital, with fixed-rate funding making budgeting easy. Despite some disadvantages, HP leasing offers high accessibility to financing and prevents the risk of asset depreciation. Consider other financing options and consult professionals to determine the best financial structure for your business.

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