Advantages of Rental vs Cash

 

·         An inexpensive way to get the equipment you want now.

·         More affordable options on purchasing the higher level equipment.

·         Flexible installments to suite your specific pocket.

·         Equipment can be easily upgraded at the end of the term.

·         Maintenance & contracts are included with rental option.

·         No annual software license fees for the duration of the rental.


Rental

 

May escalate installments to suit clients needs

V.A.T payable monthly

Interested calculated on cash price before V.A.T

100% TAX deductable

Operating expenses in the income statements

No CAPEX approval required

No governed budgets

No deposit is necessary

Improves “equity ratio”, “current ratio” &”return on assets ratio” on financial ratio analysis

Software, installation & control card can be included into rental

Option to upgrade equipment is available free of additional V.A.T on original equipment & if the same supplier is used for new equipment, a preferential discounted figure is given – effectively this is a higher “TRADE IN” amount

Cash

 

Upfront capital outlay reduces working capital

V.A.T payable upfront

Interest lost over period as cash paid upfront that could have enjoyed an interest of its own

Deductible by depreciation via balance sheets annually

Appears on the financials as an asset

CAPEX approval required for purchase of equipment

Governed by the company budgets

Capital outlay upfront

Has to be capitalized

N/A

Very little / no value is attached to “TRADE INS” / 2nd hand equipment after a period of + - 3 years and therefore capital would effectively be lost when new equipment is purchased. No return on capital would be recognized