Products
Benefits of Rental
Advantages of Rental vs Cash
Rental |
Cash |
| May escalate/de-escalate instalments to suite client | Capital outlay upfront reduces working capital |
| V.A.T. payable monthly | V.A.T. payable upfront |
| Interest calculated on cash price before V.A.T. | Interest lost over period as cash paid upfront that could have enjoyed an interest return of its own. |
| 100% tax deductible monthly | Deductible by depreciation via balance sheets annually. |
| Operating expense in the income statement. | Appears in the financials as an asset. |
| No capex approval required | Capex approval required for purchase of equipment. |
| Not governed by budgets | Governed by the company budget |
| No deposit is necessary | Capital outlay upfront |
| Improves ‘equity ratio’ ‘current ratio’ and ‘return on assets ratio’ on financial ratio analysis. | Has to be capitalised |
| Software, installation, and control cards can be included in the rental. | N/A |
| The option to upgrade equipment is available free of additional V.A.T. on original equipment and if the same supplier is used for new equipment, a preferential discounted figure is given – effectively this is a higher “trade-in” amount. | Extraordinarily little to no value is attached to trade-in or 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 recognised. |
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