Terms and Definitions

Terms and Definitions

There are some standard guidelines to keep in mind when considering your purchase of a new professional-quality copier or printer. MFP’s (multi-functional peripherals or printers) are used in most general office environments. They offer the advantage of combining print/copy/scan/fax, or any combination thereof, in one device which saves space, simplifies the ordering of supplies and can also save money by decreasing postage costs as well as long-distance charges. Additionally, there are programs which can track printing and fax costs back to individuals, departments or specific clients. Finally, they utilize duplex printing which saves on paper,and toner is much less expensive than ink while the new models are extremely economical in their energy consumption.
On the down-side, the initial acquisition of copier hardware is more than a ‘disposable’ printer from a big box store. Copiers also require scheduled maintenance to perform at their very best and are, in general, not quite as reliable as a basic printer. However, keeping them serviced, cleaned and maintained will solve all but the most unusual issues. The Total Cost of Ownership (TCO) is therefore much less considering the long, useful life of the equipment, energy saving features and supply costs. They should be considered a capital investment, like a car, which will provide years of continuous service if treated properly.
Printers just print, but they do it exceedingly well. They can be super-fast and offer exceptional image quality of up to 9,600 x 600 dpi. They have a lower sticker price but their consumables can cost a bit more. Less service is required for printers since there are fewer moving parts. The toners often come with new drums in one easy to replace cartridge. This maintains a high standard of print quality with much less regular maintenance.
Financing can be arranged for up to 125% of the purchase price of your machine, software and accessories. This is usually available for either new or pre-owned equipment and is funded either in-house or by a third party. Once approved, you will have several different lease options and your tax professional can help you decide which will be the most cost effective for your business.
Fair Market Value is the most common form of financing for business equipment. Interest rates are generally lower, monthly payments are much less and some or all of these payments may be tax deductible as a business expense. Another advantage of a FMV lease is the opportunity to upgrade your equipment at the end of your term. This is a terrific option for businesses in either growth or reduction mode or if you don’t know where you will be in 36 or 60 months. At the end of the contract you will have several choices:
1) Buy the machine for the remaining FMV, to be determined by               the leasing company
2) Continue to make lease payments and keep the machine till it is        paid in full
3) Trade your copier in for a new machine which better suits your          needs or
4) Pay to send it back to the loan guarantor
On the down-side, a FMV Lease has the potential for 'trapping' a customer with a particular vender for a long, LONG time. Since the 'value' of the equipment is determined by the leasing company, or the manufacturer if they hold the paper, the residual balance assigned may still be quite large, even after 60 months. The customer is cautioned to get, in writing, what the balance or balloon payment will be at the end of the term. Anything more than 10% of the original value means that your payments have been artifically lowered to get your business and you are now on the hook for shipping costs, at minimum, inflated lease buy-out rates or facing the need to sign a new contract with your provider to avoid additional expenses which could very well be in the thousands of dollars.
$1 Buy-out is a straight-forward business loan. You decide what term length offers the payment schedule you are comfortable with and then at the end of the contract you pay $1 and own the machine. This choice usually results in larger monthly payments but there is no 'balloon' payment required to terminate the contract. This option does offer some tax advantages as well through capital depreciation. Again, you and your tax professional can decide which program would best suit your situation.
Maintenance Agreements are offered on all equipment purchased from Office Products Services. This is a monthly charge and is based on your current or projected print volumes. Our service agreements include all parts, labor and toner. This is a way to pay for your recurring maintenance needs as well as any unforeseen mechanical problems on a monthly basis which can be identified as a line item in your operating budget. Contracts may be cancelled by either party with 30 days written notice. Service and supplies will then revert to a Time and Material basis. Regular service is billed at $115 an hour and IT assistance is $149 per hour. Supply costs will vary depending on your machine. Ask your rep for toner prices for your equipment.
IT Services are over and above our normal maintenance program and are billed hourly at $149. We will network three computers to your copier equipment at no charge as part of our initial installation. Each additional work station is billed at the normal IT rate. Network issues arising after the original installation are considered billable calls. Unless your computer is hardwired to the copier equipment it is highly recommended that you hire an IT professional to insure that your network is operating properly, as we assume responsibility for our equipment ONLY. A lost IP address, failure to scan properly after a system upgrade or changes made to the system by your administrator are examples of network issues and are NOT covered by our maintenance agreement. We may be able to assist you with some of these problems but you will be charged for our services.
We appreciate the opportunity to work with your organization and look forward to a long and successful relationship. Thank you!
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