“Rent money is dead money”
… or so the saying goes.
But when you do the sums, the reality is quite different.
Like any financial decision, there are costs and benefits associated with financing, buying and renting, and contrary to what you might expect financing or buying doesn’t always come out on top.
Here’s what you need to consider:-
- Preserve your cash flow
Rental preserves valuable capital to be used for other critical investments. (Economist’s call this the opportunity cost of capital)
Instead of the traditional ownership model that can bring many hidden costs, rental enables your business to align IT expenditure with your overall strategic plan.
Customised payment cycles simplify budgeting and administrative tasks. (the ability to expense the full opex may bring additional tax benefits to your organisation)
Payments can be designated as an operational expense, allowing you to track costs by department, accurately measure expenditure, and simplify the allocation of resources.
- No security required
Rental products doesn’t require security in the way of a mortgage or GSA, enabling you to leverage those assets more effectively to support business growth.
- Seamless acquisition
Intermittent acquisition of IT&T assets may be unavoidable, however with a rental limit in place, acquiring additional equipment is seamless and efficient.
A Master limit can be established with signatories allocated for future schedules able to be signed by designated authorities rather than directors or the board.
- Easy upgrades & Flexible end of term options
Renting provides you with the flexibility to make changes during the rental period, upgrade to the latest equipment to meet the growing needs of your business, and shift the risks associated with asset ownership to the rental provider.
End of Term flexible options include;
- Return the goods with no further obligation;
- Make an offer to purchase at fair market value; or
- Continue renting the equipment on the same or discounted terms.
- Reduction in storage costs
Rental means no more headaches and costs associated with storing obsolete equipment, data sanitation and/or disposal.
- No Residual Risk & more cost-effective solution
90 days out from the contract end, you can decide to: With a Rental, there is no end of term residual or balloon payment risk for you.
The Rentor (Lessor) takes any residual risk & thereby reduce the rental payments you will make through the term.
With the Lessor taking any residual risk, the reduced payments will mean a much cheaper solution for you (implicit rate) than traditional loans/chattel mortgages.
“If it appreciates buy it, if it depreciates rent it”