EST . 2011

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Printer, Copier & Telephone System Rentals

Introduction to Rental Financing

Rental financing has been created to make it possible for you to expand your systems as required, without affecting your budgets and cash flow. It offers the greatest possible tax advantages and caters for the current high inflation rate in the economy. Financing packages are created depending on your requirements to cater for cash flow and budget constraints, rent-free periods, residual values and bullet payments.

Renting or leasing office equipment in South Africa offers several advantages for businesses looking to optimize their operations and manage costs. Here’s a comprehensive overview of what you need to know:

 

Why Rent or Lease Office Equipment?

  1. Cost Efficiency: Renting or leasing can be more cost-effective than purchasing outright. This is particularly beneficial for businesses with limited capital or those looking to avoid large upfront expenditures. Payments are typically predictable, which aids in budgeting and financial planning. 
  2. Access to Latest Technology: Renting or leasing allows businesses to access the latest technology without the financial burden of buying new equipment. This ensures your office is equipped with up-to-date, high-performance tools.
  3. Flexibility: Rental and lease agreements offer flexibility in terms of contract length and equipment upgrades. Businesses can adjust their equipment needs based on changing demands or technological advancements.
  4. Maintenance and Support: Many rental and lease agreements include maintenance and support services, reducing the burden on your IT team and ensuring that any issues are promptly addressed. 
  5. Tax Benefits: Rental and lease payments are often considered operating expenses, which can be tax-deductible. This can provide additional financial benefits for businesses.

 

Types of Equipment Available for Rent or Lease

In South Africa, businesses can rent or lease a variety of office equipment, including:

- Printers and Copiers: Essential for day-to-day operations. Options include monochrome and colour printers, multifunction printers (MFPs), and high-volume  copiers.

- Computers and Laptops: Useful for maintaining up-to-date technology without the hassle of purchasing and disposing of old hardware. 

- Office Furniture: Desks, chairs, filing cabinets, and other essential furniture can also be rented or leased, providing flexibility for office layout changes.

- Telecommunication Equipment: Includes phones, fax machines, and other communication tools.

 

Key Considerations When Renting or Leasing

  1. Choose a Reputable Provider: Research rental and leasing companies to find those with a strong track record of reliability and customer service. Look for reviews and testimonials to gauge their reputation.
  2. Understand the Terms: Carefully review the terms of the rental or lease agreement. Pay attention to details such as contract length, maintenance responsibilities, and any penalties for early termination.
  3. Consider Maintenance and Support: Ensure that maintenance and support are included in the agreement. This can help avoid unexpected repair costs and minimize downtime.
  4. Evaluate Flexibility: Check the flexibility of the agreement, especially regarding upgrades or changes in equipment needs. This is important for adapting to evolving business requirements.
  5. Assess Total Costs: Calculate the total cost of renting or leasing over the agreement term, including any additional fees or charges. Compare this with the cost of purchasing equipment outright to determine the most cost-effective option.

Renting or leasing office equipment in South Africa can provide significant advantages in terms of cost savings, flexibility, and access to the latest technology. By carefully selecting a reputable provider and understanding the terms of your agreement, you can ensure that your business benefits from reliable and up-to-date equipment while managing your budget effectively.

If you’re considering renting or leasing office equipment, reach out to local providers to discuss

Would you like a rental agreement? Contact us today!

Rental Agreement Features

Equipment Rental

Rentals give clients full use of the equipment over a period of time at a monthly cost, but do not confer right of ownership. Our intention is to ensure you enjoy full use of equipment at the lowest cost possible.

Contract Terms

A five-year agreement is the norm, however 36- and 48-month periods are also available.

Tax

Rentals are 100% tax deductible as an operating expense. Your budget is therefore not affected by capital expenditure (capex) constraints and allows you flexibility to upgrade within the rental period, or within a fiscal year. Value Added Tax (VAT) is not capitalised on the agreements but paid monthly on the rental. This provides valuable savings at the time of upgrading as VAT is only paid for the period the equipment is in use.

Escalation

Normally an escalation rate of approximately the expected rate of inflation is built into the rental structure. This takes future rentals into account by considering inflation (which erodes the value of money over time), keeping the payment equal in real terms measured today.

Accounting

Copier and Printer Rental is an operating expense and is not reflected on the balance sheet in any way. Rather it is shown in the income and expenditure statement and noted in the accounts as a commitment.

Advantages of Rental as Apposed to Cash

Rental

  • May escalate instalments to suit user
  • VAT payable monthly
  • Interest calculated on cash prices before VAT
  • 100% tax deductible monthly
  • Operating expenses in the income statement
  • No capex approval required
  • No deposit is necessary
  • Recoupment tax avoided
  • Off balance sheet
  • Control / contact with user base is secured
  • Improves equity ratio, current ratio and return on assets ratio on financial ratio
  • Option to upgrade equipment is available free of additional VAT on original equipment and if the same supplier is used for new equipment, a preferential discounted figure is given effectively this is a substantially higher “trade-in” amount

Cash

  • Capital outlay up-front reduces working capital VAT payable up-front
  • VAT payable up-front
  • Interest lost over period as cash – that could have enjoyed an interest return of its own – is paid up-front
  • Deductible by depreciation via balance sheet annually
  • Appears in the financials as an asset
  • Capex approval required for purchase of equipment
  • Capital outlay up-front
  • N/A
  • On balance sheet
  • Control of user base is lost
  • Has to be capitalised and most ratios effected
  • Very little or no value is attached to trade in or second-hand equipment after a period of about 2 years and therefore capital would effectively be lost when new equipment is purchased as no return on capital would be recognised