The very terms "software leasing" and "software financing" are confusing to many businesspeople. This is due to the fact that software is typically not seen as something that is purchased over time.



This view is shared by both end-users, and the developers of software. Companies who think nothing of financing a vehicle or a new computer system will stress over how they will pay for expensive new business software. And the producers of software see no need for offering a software leasing or a software financing option.



But times are changing.



Third party equipment finance companies - companies who offer small and medium size businesses equipment financing and working capital - have responded to a need for software financing and software leasing. Thus, they are starting to include software amongst the equipment they finance or lease. There is one big overriding reason for this shift:



The High Cost of Buying Software



The simple fact is this: Software can be very, very expensive. Oftentimes more expensive than the hardware that runs it.



Now, keep in mind that when we are talking about software in this way, we are generally talking about "vertical software". Vertical software is software that is written for a specific, narrow industry (this can include industry-specific point-of-sale software, ERP systems, specialized databases, etc). It is not software that's available on the shelf at your local office supply store (the software you see there, even the business programs and operating systems, are "horizontal software" - they can be used across a variety of industries, and are relatively affordable.)



A good, clear example of vertical software is an auto parts store - they use software that's specifically written for the auto parts industry. Another example is your local jewelry retailer - they likely use a point-of-sale system specifically made for the jewelry industry.



To understand how software financing and software leasing can positively affect a business, it is important to understand the advantages of vertical software first.



For most businesses, Vertical Software usually means far more efficient business processes. In the case of an auto parts store, for example, the software will already anticipate the thousands of automobile makes and models. And will almost certainly be updated every year. The jewelry store's software will differentiate the subtle differences between two diamonds by any number of categories. And so on.



In fact, these "vertical" software programs are so effective, and become so crucial to day-to-day operations, that businesses often need this type of software to remain competitive. In many cases, it's not an option to do without.