Operational Expense Vs. Capital Expenditure: How Do You Budget for Unified Communications?

Posted by Matt Kanaskie on May 22, 2018

Traditionally speaking, businesses have categorized phone systems as capital expenditures. You buy the hardware (phones and headsets), you have it installed and you use it - any future service or maintenance needs are contracted and invoiced separately. 

That model may have served businesses pretty well over the years, but it is quickly being replaced by subscription-based communication systems. And these subscription-based communications systems qualify as operational expenses, not capital expenditures. So, how are businesses expected to compare unified communications pricing to their current process? 

First, you look at all of the components you're currently paying. Compile all bills and lease payments for telephony, including maintenance agreements, vendor support agreements and all carrier service invoices for phone-related services. The sum of all these components is how much your current phone system is costing you. These components are also what will be replaced by Unified Communications as a Service (UCaaS). 

Unified Communications: Operations Expense Vs. Capital ExpenditureHow Do I Budget Unified Communications as a Service?

By definition, Unified Communications as a Service is a subscription-based product that you purchase with monthly payments. Unlike traditional phone systems, UCaaS is categorized as an operational expenditure, not a capital expenseHowever, UCaaS still has initial expenses: installation, IP phone costs and oftentimes some local area network hardware necessary for getting the service to work. But organizations don't pay for these as a capital expenditure. These costs are bundled and rolled into your monthly UCaaS bill. It's an organizational expense as simple as a lease payment

One of the benefits of Unified Communications is that businesses can budget the service as a single, monthly payment that stays consistent month over month. There are no surprises on the back end or additional fees tacked on. Communication costs associated with your current phone bill, usage (local and long distance), support agreement, maintenance agreement, software agreement and hardware leases are all rolled into a single, monthly payment. That also means businesses have a single contract and a single point of contact for maintenance, questions and service. 

UCaaS Can Change Your Business

Organizations accustomed to handling numerous payments, contracts, invoices and consultants often find UCaaS appealing. The simplicity and convenience of the service agreement mirrors the simplicity and convenience of the service itself. With Unified Communications as a Service powered by Mitel, a service provider like Marco handles everything. 

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Topics: UCaaS