FAQ on Buying and Financing Telephone Systems

1. Where do I buy a phone system?

The majority of office phone systems are bought through dealers who handle not only the sale of products but also for the installation and programming of the system. Some manufacturers do employ their own sales and service staff to look after larger-scale customers and installations with specialized requirements for their telephone system. However, most businesses finding a good business telephone system dealer can be the most important part of the purchase, since any phone system you choose needs to be properly installed for optimal performance.

2. What steps should I take before contacting a dealer?

It’s in your best interests to really do your homework before you start to talk to any prospective phone system vendor. Here are a few steps in the right direction to ensure you are in the best position to make the right decisions for your business:

1. Familiarise yourself with the technology of phone systems and the features they can provide.
2. Meet with your management team and key users of your existing phone system (eg receptionist, sales support, accounts receivable…) to identify problems with the current system, features of the current system that are essential to be maintained and features in new phone systems that will assist.
3. From the meeting, establish a small team that will be involved in selecting and implementing the phone system. Not only will this reduce the workload it will assist in the acceptance of the change associated with the new phone system.
4. This team should produce an overview specification of your requirements for a phone system and should also look at the call patterns within the business and between other branch offices if relevant. The latter may require a manual survey for a week if your system doesn’t have SMDR facilities.
5. You should also look at your current phone bill as changing your system which may involve incorporating transmission of voice and data over ordinary telephone copper wires, resulting in better quality and higher speeds than available with analog systems. More broadly, ISDN is a set of protocols for establishing and breaking circuit switched connections, and for advanced call features for the user.In a videoconference, ISDN provides simultaneous voice, video, and text transmission between individual desktop videoconferencing systems and group (room) videoconferencing systems.

3. What should I find out about the dealer before doing business with them?

There are a number of steps you can take and questions you should ask about the dealer before commencing business with them, and especially before purchasing anything.

1. How long has the dealer been in business and under the same ownership ?
2. Is the dealer factory authorised and are all the technicians factory certified on the equipment they work with?
3. What is the dealer’s refund policy if you are not happy with their services?
4. Does the dealer install additional lightning protection and a good warranty?
5. Does the dealer have a good upgrade or expansion policy in writing?
6. What kind of training will your staff receive on a new system, and for how long?
7. Have a look in the Yellow pages: If the dealer carries many brands it’s likely they aren’t factory authorised.
8. Find out if the dealer vends “Supply House” systems: Many dealers do buy their systems from supply houses, and while some may be very good dealers others tend to just read the manuals to learn how to install and set up systems. They may outside installation and maintenance to independent technicians as a result, and this can be risky.3. What financing options are available when purchasing a phone system?Much like other capital items for your business, you can conserve your working capital by financing the cost of your business telephone system. The standard forms of financing telephone systems include the following: 
   Financial Lease
   • The distinguishing characteristic of a financial lease is that you own the asset and commit to a regular payment schedule for the term of the lease. At the end of the lease you will pay the finance company a once off amount (known as the residual), to complete the transaction.
   • The monthly payment schedule will include an interest charge for the financing of the phone system.
   • A lease cannot be cancelled without some penalty and you will need to enter into a separate service agreement for the equipment with your phone dealer.
   • The taxation treatment of the telephone system will be related to the depreciation schedule for the equipment and the interest component. You should consult your tax advisor for more detail on this.Rental
   • One of the main advantages of rental is you reduce the obsolescence risk on your phone system as you do not technically own the asset.
   • At the end of the term of the agreement, you can either upgrade your telephone system to the latest technology or negotiate a reduced rental on your existing equipment if it still suits your requirements.
   • The monthly rental payment will usually be more expensive than a financial lease;
   • The rental agreement will also include e arly cancellation penalties .
   • If you require service support on your equipment, the service charge can be built into the monthly rental fee.
   • Taxation treatment is simpler with the monthly pa yment fully expensed.
   • You need to check that additional handsets and other expansions you will require during the rental term, can be easily added to the rental agreement 3. What is bundling and what are the traps involved?Another form of finance option that is available for business telephone systems is called bundling and involves an agreement to rent a telephone system linked together ( bundled ) to an agreement to use the telephone network services of a specific Telco . The benefit of this bundling is a reduced cost to you compared to entering into these agreements separately.
   • The bundling discount to you is usually provided by a credit on your monthly call charges provided your overall call costs reach a minimum level which is determined by your call history from previous telephone bills. Some bundling products provide the bundling discount as percentage discount on the cost of your calls.
   • Not all dealers provide a bundling option, while there are some dealers who specialize in bundling all office products (phone systems, copiers, IT equipment ) with telephone network servicesBundling can reduce your total telecommunications costs but there are plenty of traps as well:
   • The rental payments for the telephone system can be inflated make sure you identify the actual cost of the phone system so you can check if the rental payments are reasonable;
   • Ensure the minimum call spend that determines when the call credits apply is reasonable based on your past telephone bills and any promised reduction in call costs;
   • Get the dealer to provide an analysis of your call costs under the new agreement using the calling patterns from previous bills so you can identify the likely savings or additional cost to you;
   • There are some very aggressive companies who market the benefits of bundling but don t have the expertise to ensure you get the telephone system that suits your needs.
   • Check the bona fides of the company offering the bundling to you and identify who is installing and providing after sales support for the system.
   • Get some references of customers who have purchased a bundling product from the dealer.
   • Also make sure you get a dealer that does not provide a bundling offer to give you a proposal for a telephone system as well.

4. How much should ongoing service and maintenance cost?

The telephone system is an extremely important part of any organisation, as it maintains external and internal communication. As such, maintenance and support is extremely important in ensuring your business is never out in the cold .or disconnected for an extended period of time.

A service contract is a good way to ensure ongoing support and service. Much like insurance policies, a contract may be a waste of money if nothing goes wrong, but when you need them they are extremely valuable. Some vendors will even cover remote programming under their contracts, which does make them more affordable. Generally, a service contract for a 4-port system with Voicemail will be around $575-800 per year, while a contract for a system with 8 lines by 24 extensions for 18 phones, for example, will cost around $700-1,000 per year. That is a very generalised example and contracts can vary widely amongst vendors. Its also important to note that some vendors will sell their service contracts to third parties, which is not a good thing because this third party may not provide the quality the initial vendor promised and should have ensured.