rental vs. purchase

 

“Leasing equipment has long been a popular means of reducing business costs.”INC

 

Cash Purchase Rental
Payments Payment is always upfront, and in full. Payments are fixed and can be spread over the useful life of the equipment. This is in the customer’s advantage.
Disposal of Equipment The owner is responsible for the disposal of the equipment. The disposal has some associated costs (not too small). The rental company is responsible for the disposal of the equipment once it is returned. Customers don’t have to worry about disposal.
Ownership Aspects of ownership, as well as the risks associated with ownership lie with the organization. Risks of ownership lie with the rental company, not the customer. No need to worry!
Obsolescence The owner is forced to accept any decrease of the equipment’s value. All risks associated with equipment obsolescence and depreciation lie with the rental company. Again, no need to worry!
Taxation Owner may claim a tax deduction. All Rental Payments are tax deductible over the period of the rental term.
Upgrade There is no upgrade facility in place. Upgrading is impossible or very hard. An upgrade facility may be available at any time during the rental period. All you have to do is ask.

 

Paying Cash. When you can

 

Nowadays, people pay cash simply because they have it. Paying cash for equipment works great when an organization has a lot of spare cash and has nothing else to do with it; when the business doesn’t have to invest the cash in improvements or invest it to get a high return. Although banks would be happy to finance these businesses, there is no need for extra cash.

 

Paying cash. When you can’t

 

Unfortunately, most businesses cannot say that they have so much money that they always have free cash which cannot be invested in business improving activities. In these cases the smartest business decision is to place your equipment on rental. You can now use your free cash to improve your business. Moreover, a rental is easy to obtain.

 

There is an anecdote which illustrates this point perfectly. It is referred to as the “milk truck” anecdote:

 

James is selling milk to Sam’s Supermarkets. James needs to invest in a milk delivery van as well as in his inventory of milk. James buys his milk truck for R 1 000 000 in cash. He also buys his first consignment of milk for R 500 000. This means that James has laid out R 1 500 000 in cash. James proceeds to sell his milk and turns a profit of R 100 000. This means that he can buy another R 100 000 worth of milk. Unfortunately for James, his truck can only carry R 500 000 worth of milk so he needs to buy another truck. If James’ business continues to grow at R 100 000 a month, he will be able to pay for a new truck in 10 month’s time - unfortunately he won’t have any spare cash to buy the additional milk he will need to fill the truck.

 

However, if James rented his first truck, he would be fixed to about R 25 000 per month as a repayment and he would have a mountain of free cash available. With this cash he could rent another truck and start his business on a massive growth path by renting 2 trucks and purchasing enough milk to fill both of them.

 

Why should you choose a rental solution?

 

Desktop computer rentals are becoming an increasingly popular option for small, medium and large businesses. With top tier brands such as Apple, Dell, HP, IBM, Compaq, Sony and Toshiba available with nationwide delivery at very reasonable rental rates, it is no wonder that so many companies are opting out of purchasing computer equipment and opting in to desktop rentals.

Hundreds of desktop models from top tier brands are available to business owners and representatives for both short long and short term rentals. Along with the rentals come complete computer equipment configurations, installations, custom software loads, around the clock technical support, and flexible upgrade and rental term options.

If your business is considering taking advantage of desktop computer rentals, there are certain considerations that should be taken into account before making your decision. To begin with, consider which software your business will be running on your rental desktop. What applications will be utilized and what is the approximate minimum memory that will be needed. As an example, 40 GB will be suitable for primary computers, and as much as 500 MB RAM will be necessary for media usage. Another consideration that goes along with your desktop rentals is secure networking. Desktop computer rentals should include built in means to connect to your existing network. The connection capabilities could be either wired or wireless. If your existing network provides Internet access, you should be sure to rent, or plan to install, virus protection software.

Of course, if your business if planning to utilize desktop rentals, consider which accessories your rental will require. Many accessories, options, and even upgrades are available at no extra charge. Consider your computer desktop rental requirements. Computer accessories such as wireless keyboards and mice, software, speakers, stereo headsets, memory and hard drive upgrades, high resolution video cards may or may not come in handy depending on your required use. Beyond accessories, there are accompaniments that you may also like to rent, along with your desktop rentals. Items such as wireless notebooks, color printers, scanners, presentation size monitors and projectors upgrade options and networking accessories.

Flexible desktop computer rental companies will allow business owners to extend rental contracts without penalties or hassles. In fact, long term desktop computer rentals can be extended for as long as three full years! As an added benefit, you may be able to upgrade your rental at anytime, which comes in handy if the manufacturer introduces a newer model or more advanced technology. If your rental needs extend beyond thirty six months, simply ask your desktop rental company about direct purchase or even rent to own options. Rent to own and purchase options are not available from all desktop rental companies, these options are exclusive to specific rental companies with great connections.

Whether your company is presenting at a major tradeshow, in charge of a large corporate event, providing corporate training, or simply experiencing a seasonal upswing, desktop computer rental services are a smart, cost effective, and easy decision.

 

Purchase (Balance Sheet Item) Rental (Operating Expense)
Tax Benefits No Yes
Impact On Cash Flow Yes No
Flexibility No Yes
Depreciation Yes No
Obsolete Technology Yes No
Inventory Control No Yes
Self Disposal Of Equipment Yes No
Operating Costs Yes No
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