Lighting as a Service FAQ
November 5, 2020
We understand that Lighting as a Services comes with many questions. If you don’t find the answer to your questions below, or you would like to read more on the topic, we suggest reading the other LaaS articles in this series.
You might be hesitant to use a lighting as a service provider, but there are major benefits of LaaS that include saving money and having worry-free maintenance. However, if you still have questions these perks might not be enough for you to enter into a service agreement.
To help you decide that Laas is the best option for your business, here are some of the most frequently asked questions. You’ll find answers to everything from financing lighting projects to understanding the benefits of LED lighting as a service.
Lighting as a Service FAQ
LED lights are installed and maintained through a subscription service with a LaaS provider. Since it is a service, companies pay monthly instead of up-front for product and installation costs.
Financing energy-efficient projects doesn’t require a trip to the bank. Instead, companies are automatically billed through the monthly subscription service. The monthly subscription cost covers products, installation, and maintenance.
If there’s an issue with the installed LED lighting, the Laas provider has a set number of days to correct the problem. The amount of time is listed in the service agreement. If the problem is not resolved within the timeframe, a discount could be applied to each bill until it is fixed. (this will depend upon your service provider and agreement)
The lighting as a service provider owns the lighting system. You, as the business owner, are renting it. Since you do not own the lighting you are not responsible for product related issues, instead, the service provider is.
The advantage of LaaS is it is not a Capital Expense and is treated as an Operating Expense allowing for better tax treatment.
It is the company’s responsibility to provide proof of insurance for Business Property Coverage. It must include fire and theft to meet the agreed terms in the subscription.
Sometimes business owners need to cancel LaaS subscriptions before it ends. It can be done, though there is a cancellation fee. If you sold the building you can transfer the subscription and lights to the new owner.
The lighting as a service provider will come in and make any adjustments if needed when you decide to change how you use the space. There are not any restrictions placed on how an area is used. The only concern of a LaaS provider is to ensure the lighting system is functioning optimally. (additional charges may occur depending upon service agreement and provider)
Since a service is provided for a fee, taxes are applicable. You’ll see the tax reflected on the monthly statements. It’s taken care of by the provider. You don’t have to calculate the amount of tax owed monthly.
Businesses have options when the service agreement ends. They can renew the contract or choose to have upgrades installed. If upgrades are chosen a new contact will begin. Companies can also purchase the lighting or end the agreement. There is normally a buyout clause at the end of the contract period.
If your business is expanding, LaaS will grow with you. You can add LED lighting to the new area, though the cost is reflected in subsequent statements. It also applies when you incorporate additional technology or upgrading before the agreement ends.
While there are a lot of questions about using lighting as a service, in the end, it makes sense for business owners. It is a cost-effective way to upgrade working conditions for employees and make it safer for visitors.
For more information on Lighting as a Service, or to speak with one of our lighting specialists, contact us today by calling 610-558-9773 or email [email protected]!
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