To assist yourselves in deciding on which financing option would best suit your needs, we have summarised the salient points of the rental option.
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Monthly rentals of capital equipment is an affordable option allowing yourselves the use of the equipment without any capital outlay. |
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Rentals are 100% tax deductible as an operating expense thereby minimizing income tax obligation. |
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Payment of VAT up front is avoided and thus is not capitalised over the period of the agreement. The customer will be entitled to claim monthly VAT payments made. |
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As rentals are an operating expense and not a capital expense they are not governed by capital expenditure budgets. |
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As rentals are totally "off balance sheet" current and return on asset ratios are improved. There is also a saving of costly administration as fixed asset registers and depreciation schedules are not affected. Rentals are shown as an operating expense in the income and expenditure statement and not as a current liability |
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You have the option of upgrading the equipment before the end of the contract thereby providing the flexibility to change in line with modern technology. |
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Rentals may be escalated on an annual basis, thereby reducing initial costs and linking rental payments to inflation. |
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Rentals provide an advantage to foreign owned companies, as rentals are not shown as a current liability but rather as an operating expense. |
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Ownership, if required, can revert to yourselves at the end of the contract, via the supplier of the equipment. |
